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I am moving to Spain next week and will be setting myself up

Resolved Question:

Hi,
I am moving to Spain next week and will be setting myself up as a self employed virtual PA. My clients will all be in the UK, I have a UK address, all monies will be paid in sterling into a UK bank account and monies will not be transferred directly to Spain.
I would like to pay tax and NIC in the UK, not Spain, as setting myself up as self employed in Spain is very costly and complicated. As I am not trying to avoid paying any UK tax, is this feasible please?
I will not be earning more than £18,000 per year.
Many thanks
Michelle
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Spain, like the UK, operates a 183 day rule so once you move there you will be liable to the Spanish Income Tax system. As far as the UK is concerned once you move there you would be classified as non resident assuming you completed the P85 procedure. If you elect to operate under the UK taxation regime then the Double Taxation Convention between the UK and Spain would apply and any tax deducted by the UK would be allowed as a tax credit against any Spanish tax on the same income stream. The Convention does not protect you against differences in rates of taxation and, with your UK personal allowance, which is slightly greater than Spain's equivalent, you will almost certainly owe tax in Spain also when all the chips are down. Never forget Benjamin Franklin's dictum that in life there are but two certainties, death and taxes! Just to complicate matters Spanish tax varies by region with Madrid being the lowest and Catalonia the highest. You can read about Spanish taxation here: https://en.wikipedia.org/wiki/Taxation_in_Spain I do hope that you have found my reply of assistance. You will almost certainly need guidance from a local professional once you are settled.
Expert:  bigduckontax replied 10 months ago.
This thread has come up again, but with no more data.
Customer: replied 10 months ago.
Thank you for your answer Keith. Can I just ask a couple of follow up questions please:1) How often would I need to come back to the UK for double taxation not to apply?
2) Should I really be setting myself up in Spain rather than the UK?
3) If I proceed to set up in the UK how likely is it that Spain will ever find out bearing in mind everything will be based in the UK?Best wishes
Michelle
Expert:  bigduckontax replied 10 months ago.
1. Double taxation relief always applies. 2. Well I cannot answer whether you should set up in Spain, personally I prefer Portugal, but that is just a personal opinion. Be careful about medical cover though. I understand there is a window in an ex pats life when the Spanish system will not accommodate you. 3. I could not possible comment upon your last question, Michelle as I am sure you will understand. Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 10 months ago.
Thanks Keith - yes, I'm aware of the medical cover and will be taking out private insurance.So whether I set up in the UK or Spain I am liable to double taxation - is that right?I completely understand re: my last question and will definitely rate you.Thank you
Expert:  bigduckontax replied 10 months ago.
You could be, but you will, in part, be protected by the Convention as I explained.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3356
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 10 months ago.
Sorry, one more question, so partly protected by the tax credits I earn in the UK?
Expert:  bigduckontax replied 10 months ago.
but the Convention odes not protect against differences in rates of taxation between countries as I explained originally. Thank you for your support.

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