UK salary but non-uk resident

[juanmartinez]

I know I will need to pay for a tax advisor to be on the safe side with this, but I want to know if this is even possible before I pay for professional services.

I'm a Spanish National living and working in the UK and paying all my taxes in the UK right now.

I will be moving back to Spain in a few months and my current employer is happy to allow me to work remotely but they don't want to pay my salary in Spain because it's too complex and expensive for them.
Fair enough, so I've been looking into the double imposition agreements and I think it's possible but I see it's quite complex and I would like to know if someone here has done something similar and if they think it's worth doing.

The plan is to keep receiving my salary in my current British bank account as usual.

I've seen that you can either ask the UK Revenue office for a Tax Relief or claim the paid taxes back at the end of the Tax Year. Is this really possible? Is there any flip-side that I should take into consideration?

It will not be a 100% remote worker, I will "live" and work in the UK for 1 week a month or so. I'm not sure I will rent a place, I will probably stay in a hotel, but I will definitely be working for 1 week a month in the UK. I don't know if this is legally any different from working 100% remotely, but you tell me. If this make things more complicated, I could think about working 100% remotely.

Then I would have to talk to the Tax Office in Spain to declare my UK income and pay taxes there, but this is something I can easily do, I'm more interested in the paperwork I have to go through in the UK.

Thanks in advance for your help.

[GlobalTaxAdviser]

Hi

You will be become tax resident in Spain and possibly tax resident in the UK under the Statutory Residency Rest. Hence will pay tax both in Spain and UK on the same income

If you are resident in both countries then you will get tax credit based on the the double tax treaty likely to be in Spain

Kind Regards

GTA

[etf]

If you can perform all of your work in Spain, you may qualify as non-UK resident and be able to avoid paying UK tax on your earnings. Take a look at the 3rd automatic overseas test in RDR3 and also the split tax year rules.

Your UK employer will need to identify whether they will be exposed to Spanish tax reporting e.g. Spanish payroll and they should seek local advice. If the situation was reversed a Spanish employer would have to deduct UK NICS.

An employer in another member state will have exactly the same obligations to deduct NIC as an employer with a place of business in the UK.

This means they are responsible for all the same obligations as UK employers in terms of deducting employee contributions, paying employer contributions, keeping records, filing returns to HMRC and so on.


Of couse Brexit may change these EU rules.

KR

etf

[juanmartinez]

thanks @GlobalTaxAdviser and @etf for your answers.

I'm fully aware that Brexit may change everything, but I don't plan to do this for more than 2 years, so I'm not really bothered.

I thought of renting a place to be easier for me, but if this will mean being considered a resident in both places, I may skip that and simply book a hotel room.

In any case, I understand that having to pay tax both in Spain and UK doesn't mean I have to pay 2x the same tax, right? I mean in terms of quantity. I have no problem in paying tax advisors in both places so that they sort out what part I have to pay in each country, but from the Double Imposition agreement I understand that I don't have to pay double. I don't mind paying more taxes (considering the 2) than the amount I'm paying now, but if I have to pay twice as much, this is definitely something I will not do.

I'm quite confused with the Automatic tests and I think apart from tax I will also need legal advise to figure this out?
Because I'm not planning to do this for more than 2 years anyway, it seems that I will be considered resident in the UK because I've been a resident in the last 3 years (together with the other criteria)?

Even I stay in a hotel and I spend less than 90 days in the UK (5 weekdays a month), it looks like I will be considered a resident in the UK for those 2 years I intend to work remotely?

I've found this online calculator, I don't know if it's any good:

http://tools.hmrc.gov.uk/rift/screen/SR ... user=guest

Thanks for your help.

[GlobalTaxAdviser]

Hi

If you are deemed to be resident in both countries then there is tax to pay on the same income but under the double tax treaty between UK and Spain you will get a tax credit under Article 22.

The Tax Credit presumably will be given in Spain as you are treaty resident under Article 4 most probably due to your permanent home or Centre of Vital Interests in Spain

Yes the statutory residency test is complicated. You will have to see if you meet the 3rd Automatic Overseas Test especially the Overseas Work Criteria.

Kind Regards

GTA

[RMC]

Your employer should give you a statement showing pay and tax to date of your starting work in Spain, and should also inform HMRC.

Under DTC (which overrules Statutory Residence Test) you will be tax-resident in Spain, but non-residents are liable to UK tax on earnings for work in the UK, and your employer will continue to deduct UK PAYE tax as instructed by HMRC. You should keep records of work done in each country. It is not clear what you intend to do after 2 years – work only in the UK or in Spain, or your contract expires?

Unless HMRC or Spanish tax office regard you as constituting company ‘presence’ in Spain, if your employer does not otherwise have ‘presence’ there he will probably not be required to deduct Spanish tax. Having to pay tax in both countries is called ‘double withholding’ and can create cash flow problems.

In due course you will have to register in Spain as a taxable person, file tax returns and pay tax claiming relief for UK tax suffered .

Because of the complications small employers often ask people working overseas to go self-employed, which is much simpler. One of the disadvantages is loss of employment rights.

There are also Social Security aspects to consider.