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Thread: Setting up UK Co - IVA - legality

  1. #1
    Junior Member
    Join Date
    Sep 2012

    Default Setting up UK Co - IVA - legality

    I looked through lost of interesting threads, but still have some questions.

    I am a UK National, who lived and worked and paid taxes in the U.S. for many years up until earlier this year. I have recently moved to Spain and would like to become resident and have a legal presence here. I am a Sports coach and perform my business in various international locations, but more of my business will be done in Spain in the future, which is why I have relocated here. I still intend to travel for work and approx 40% of it will be done in other locations. Whilst in Spain I will purchase use of a facility that will then be passed on to my clients as well as a coaching fee. I know that I will be charged IVA on that.

    I am fine with being paid in Spain, declaring income and paying social security and taxes.

    I would like to avoid paying the IVA on my profits. My business will generate less than 77K pounds per annum and if I set up a UK company I would not have to register for VAT. I would have to pay IVA for services I buy in Spain but I was hoping that if I had a UK company I would not have to include VAT when billing my clients from my UK company and receiving those monies in the UK.

    I spoke with a Gestoria here, and they threw a spanner in the works, by saying that if I did any of my business in Spain, I would also have to register my Company in Spain as well.

    Can anyone let me know if this is the case? If I do business in lots of countries, would I then have to register in all of those countries too? If I end up having to register in Spain, then there is no point in setting up a UK company.

    I don't mind contributing to the system, but if I do this completely the normal route I will end up paying nearly 47% of my income to the government in one form or another, which sees a bit steep to me. I do not want to do anything illegal, however, I am very happy to look into any legal loopholes that I can use.

    Does anyone have any suggestions about ways to do this please?

  2. #2


    Hello Eiranne,

    First of all you will need to confirm with the HRMC if that VAT tax limitation of 77.000 pounds applies to companies offering services abroad.

    Please note that it is essential to know the VAT and specific regulations of the country where the service is being offered, whenever you offer services abroad. This determines which country's VAT rules should be considered and how you have to account for the VAT on the profit you make.

    If you are in the UK and you offer your services in another EU country, the service rendered is outside the scope of UK VAT. However, for certain types of services, you may need to register and account for local VAT in the country where they are rendered. If you settle in Spain, the VAT is currently 21%.

    I recommend you to get a Gestor dealing with your accounts once you settle in Spain and start operating.

    Patricia Martin
    Immigration Consultant at Lawbird | Contact Me
    Check My Profile


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