Autonimo/Self-Employed or Limited Company - in the UK or in Spain?

[Unregistered]

Hi,
I used to have a company in spain and I would like to warn you it is very expensive to set up, close down and run (you still have to pay the 250 euros SS before earnings)
I am now in a similar situation to you and have decided to register as a sole trader in the UK. Although it is not fully correct to do this I want to do things legally without being robbed by the government. If you are charge before earnings this is nothing but robbery in my book. I also cannot afford to pay 250 euros for the right to be able to earn money.
Also as for claiming costs etc in Spain nobody really nows what they are talking about, including the tax office and the laws are contradictory. When ever I had a tax question I would ask 5 different people (no exaggeration) and I may get three different answers. So I had to choose the answer that got the most people behind it.
Spain is a nightmare to pay tax and do BOOKS in.

[Masquette]

Hi, thanks for your reply. Indeed it does sound like you are in a very similar situation to me! Its very frustrating, and as you say, it seems nobody actually knows what they are talking about. I totally agree with you about the "robbery" of paying despite earnings, and also, like you, I can't afford to pay 250EUR+ for the right to earn money honestly! However, I was told that since I live outside the UK more than 180 days in a year I am obliged to sort out all my tax and books etc. in Spain and cannot do it in the UK. I'm still waiting to find out if I can indeed earn up to 3000 EUR with out paying SS and registering with hacienda, just the companies paying the tax... Though I don't know how that would work with the IVA + I.R.PF that I think I have to pay... It seems impossible to get any sound and useful advice!

[Patricia]

Hello Masquette,

We are concerned that the amount of information you require might confuse you even more , and it will probably be better to contact us directly or make an appointment with a gestoria around you area to clarify.

In the meantime please read the different areas you will need to consider in order to became a self-employed worker in Spain.

In order to become a self-employed worker in Spain you will need the services of a gestor (similar to an accountant). They will register you with the Agencia Tributaria (Inland Revenue Office) as being self-employed and will do your quarterly and annual accounts. Make sure you choose a professional English speaking gestoria as you will be relying on them to calculate your IVA (VAT) and tax returns each quarter.

As a self-employed you will have to pay by direct debit your social security fees each month. This means that you are entitled to make use of the "national health" system and also receive a pensioners´ benefit when you retire. There are social security discounts and their amount can vary in relation to your age and special circumstances.

You will have to issue invoices for the services you render and you will have to keep proper records of them. If you are invoicing a company as a self-employed you will also have to include Impuesto sobre la Renta de las Personas FÃ*sicas (IRPF).

As a self-employed you pay tax and your IVA (VAT) every quarter. Then, at the end of the fiscal year, that runs from January to December, you need to have your annual accounts done although they are not submitted until June of the following year. You are required to pay 20% tax on your income (after expenses have been taken into account) each quarter.

Note that the expenses that can be offset against your profit must be related to the business so housing costs ( mortages, rental fees ) cannot be included unless the business is run from your house. However, (petrol, maintenance, etc) for most jobs in Spain as a self employed individual and telephone bills, can only be deducted in a 50% of the expense as they assume a 50/50 split between your job in Spain and your personal life.

When invoicing a company you include a deduction of 15% IRPF which means that the company you invoice retains the 15% of the tax on your behalf and pays it at the end of the year. You then need to make up the additional 5% each quarter, however if more than the 75% of your invoicing are related to a company and they deduct the 15% IRPF you are not in the obligation to pay 20%. tax on your income mentioned earlier.

You must hand your invoices each quarter (payments in and out) to your gestoria or tax/fiscal advisor so that they can calculate your IVA bill and your tax bill. This is done each quarter and at the end of the year everything is totalized to find out whether you owe additional tax or are due a rebate.

I hope this information has been useful and please feel free to contact us via our website contact form should you wish to have more specific information.

Best Regards,

[Unregistered]

I'm a Spanish national and live in Spain and think Spain is the worst place ever to do business. My advice is the following:
Setup a UK LTd owned 100% by you.
Put a nominee or a parent of yours as the director. (This way the spanish authorities won't be able to say the company is manged form Spain)
Pay yourself dividend from the earnings of your LTD
Declare corporate tax for those dividends in UK
Declare rendimientos del capital from LTD on your Spanish self assessment.
You'll pay taxes but you'll do everything by the book and be free.
There are small variations possible to that, for example you can bill the LTD for management expenses once a year and pay autonomos only for this month every year.
It looks complicated but I actually is very easy once you do it.

[deborahknight20]

I am an artist and am having success selling my work. I have a gallery that want to sell my work for me and I wish to produce posters and prints for them. I too cannot afford the autonomo, it is ludicrous to inflict such a charge in a country with such low wages and high unemployment. Ã* was also thinking of becoming self employed in the UK. Is it easy to do and would I be then able to sell to a wider market, shops, museums etc? How would I put everything through the books if I live here? I doubt I would make more that 20 000 per year.

[Lukas]

Hello,

I have a question that I believe belongs to this forum and I hope you might be able to help me.

My girlfriend is a Spanish national (and resident). She is a dentist, but she works as a self-employed person (because she works for various clinics). She comes to UK every week and she is half week in Spain and half week here. She was offered a 1 day job here as a dentist and she decided to accept the offer (as a starting point to have UK experience and to move here permanently and work for more clinics just like in Spain).

So the actual situation would be that she would work Monday-Wednesday in Spain (as a registered self-emplyed) and one day here. What is the correct way to address this situation? I assume she has to register in UK as self-employed as well? If so, does she has to make a Tax Statement in UK as a self-employed person too (or only in Spain)? And in which country should she pay the taxes (to avoid double taxation)?

I assume that the answer is that she has to be registered as a self-employed in UK as well as in Spain and that she has to fill Tax statement in both countries. However in only one to pay tax from both countries incomes (probably Spain as works more there and is a resident there) - or potentially pay tax in UK as well but later ask the tax to be returned so that the same income is not taxed twice.

Can someone advice me on this specific situation please?

Thank you very much.

Lukas

[Patricia]

Dear Lukas

Your girlfriend doesn't need to register in both countries. If she is already registered in Spain as sole trader, she only needs to invoice the UK Company for the work she does there.

The income generated will be included in her VAT ( IVA in Spain ) and Income Tax return Declaration ( IRPF ) here in Spain.

Anyhow, if she paid taxes in the UK, she could set these off against her Spanish tax bill. Her accountant in Spain will make all the necessary arrangements.

I recommend her to keep record of the number of days she is out of Spain working as she will get a reduction on her yearly tax.

Regards,

[Julia57]

Is this arrangement ok for teaching English in Spain?
I already have UK LTd company owned 100% by myself (since 2002).
My daughter and myself are both directors and she is in the uk. (This way the spanish authorities won't be able to say the company is manged form Spain -IS THIS CORRECT)
I nomally pay myself dividend from the earnings of my LTD
Declare corporate tax for those dividends in UK
Please could you explain?
Are the following 2 different options?
Declare rendimientos del capital from LTD on your Spanish self assessment.
You'll pay taxes but you'll do everything by the book and be free.
Bill the LTD for management expenses once a year (can this be my accountants fee and my admin fee)
Pay autonomos only for this month every year.
Who or what are the autonomos?
What about social security payments?

Thanks

[Unregistered]

Hi,
I used to have a company in spain and I would like to warn you it is very expensive to set up, close down and run (you still have to pay the 250 euros SS before earnings)
I am now in a similar situation to you and have decided to register as a sole trader in the UK. Although it is not fully correct to do this I want to do things legally without being robbed by the government. If you are charge before earnings this is nothing but robbery in my book. I also cannot afford to pay 250 euros for the right to be able to earn money.
Also as for claiming costs etc in Spain nobody really nows what they are talking about, including the tax office and the laws are contradictory. When ever I had a tax question I would ask 5 different people (no exaggeration) and I may get three different answers. So I had to choose the answer that got the most people behind it.
Spain is a nightmare to pay tax and do BOOKS in.

It's a complete mess here. We tried to do things right and simply put, it's not worth it. The 250€ a month before you earn is a killer, followed by trying to employ people... a nightmare. We had extra work for our employee which we TURNED DOWN! To pay and extra 250€ to the worker cost us an extra 100€ in Social Security.... AND they had to contribute.

Stay clear until the country enters our century.

[Unregistered]

Hi. I'm an english national living in spain. How would i go about setting up as a sole trader in the uk? I have somebody ready to design my website. I just meed to know all the steps i have to take to register as a sole trader and start paying taxes in the uk rather than in spain

Many thanks

Hi,
I used to have a company in spain and I would like to warn you it is very expensive to set up, close down and run (you still have to pay the 250 euros SS before earnings)
I am now in a similar situation to you and have decided to register as a sole trader in the UK. Although it is not fully correct to do this I want to do things legally without being robbed by the government. If you are charge before earnings this is nothing but robbery in my book. I also cannot afford to pay 250 euros for the right to be able to earn money.
Also as for claiming costs etc in Spain nobody really nows what they are talking about, including the tax office and the laws are contradictory. When ever I had a tax question I would ask 5 different people (no exaggeration) and I may get three different answers. So I had to choose the answer that got the most people behind it.
Spain is a nightmare to pay tax and do BOOKS in.