I'm currently employed by a UK company in London as a software developer, and I work from home. I would like to relocate to Spain, and my company are happy for me to do so, and have presented me with a couple of possibilities which work for them:

1) That I continue to be paid and taxed in the UK, and it would be my responsibility to declare these earnings to the Spanish system if necessary.

2) That I come off the payroll, invoice them monthly, and meanwhile declare myself autónomo and look after my own taxes and SS. As I understand it, IVA would be charged at 0% in this instance, as my client would be a foreign company.

I am happy to go through the process for option #2, but am wary of the falso autónomo rules, which are a little vague to me. I intend to get other contract work once I'm settled.

Meanwhile, I'm not clear what would be involved for #1. I know that paying SS would potentially be a problem. Also different sources state that there is and there isn't a double taxation agreement between the UK and Spain, so I'm not clear how this would work either. Can anyone guide me as to how involved it might be in order that the company registers in Spain, and what kind of costs there would be to them?

Any guidance much appreciated!