Expat tax band?  What’s a local branch anyway?
Posted: 01 November 2007 06:21 PM  
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Hi there,

We are relocating next year, and my other half and I will both be employed by the same UK based company - and paid by them, in sterling.  I am trying to get my head around what will happen to our income and tax liabilities, and know that I need to engage the help of a good international tax consultant before long, but I read somewhere recently that there is a special expat fixed rate tax band of 25% -  that appears to be contingent on establishing a Spanish branch of your company, but I supposed what I am really trying to understand is what constitutes a ‘branch in Spain’.  Ie is the two of us working there, out of a spare bedroom, enough, or would that definition not apply until we were in a position to employ someone locally (probably not for a year or so)?  It’s all so complicated!  And I have just found out that Spain and Uk have different tax years too - agghhh!

Sorry this is rather a niche query I guess, but I just wondered if anyone here had been in a similar situation and might have some suggestions?

I’d also love to hear any recommendations/approaches re tax consultancy - please feel free to PM me if appropriate,

gracias amigos,

Cazz x

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Posted: 05 November 2007 08:57 PM   [ # 1 ]  
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Sorry I cannot answer your question directly. Except to say Yes the Spanish government did introduce a special system for taxation of working expats - more details on this site.

I have searched the web extensively for good reliable uptodate tax info and guess what - I dont think it exists! There seems to be a lot of rubbish posted by a variety of sites which is totally out of date (CGT 35% etc)

The best I can find (and it was a link from this site!) is

http://www.spainaccountants.com

Another useful reference is the book

You and the Law in Spain - it does not cover everything on tax and you have to read carefully as it flips between resident and non resident (sorry guys its mainly for EU citizens) by David Searl. (I have mentioned it before on this site it covers lots of other stuff to and is uptodate)

Why does not some enterprising tax qualified/minded person get to grips with Spanish tax and write the book or do a site - many people would use it!

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Rob
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Posted: 05 November 2007 10:51 PM   [ # 2 ]  
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Thanks so much for the link Rob… and also for reassuring me that I am not being unusually dense for failing to get my head around it or find the info I need, it really does seem to be very confusing!  I second the plea for someone to draft the definitive expat guide asap… I would buy a copy straight away!!

Cazz x

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Posted: 19 November 2007 01:43 PM   [ # 3 ]  
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Hello cazzstar

You can operate a branch of a foreign company in Spain from your bedroom or garage if you wish. The only thing to remember is that the the premises may require a ‘licencia de apertua’ in order for you to operate your business activity.

Under EU rules you would be required to pay your taxes and social security in the country in which you carry out your activity. Therefore if you carry out your activity in Spain you would be required to contribute under the Spanish system.

Your UK company would be required to register their activities in Spain with the Spanish tax office http://www.aeat.es and with the social security http://www.seg-social.es. In order for you to be able to be taxed at source and pay your social security contributions.

We have written an article on this which you can read at http://spaingestor.com/2007/10/20/working-for-uk-employer-in-spain/

Hope this helps

Regards

David

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Posted: 20 November 2007 11:11 PM   [ # 4 ]  
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That’s a really useful article and site David, which I shall be referring my employer to asap!  Exactly what I needed, thank you so much,
C

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