Expatriates coming to Spain, whether they are seconded by their employers, self employees or pensioners face many tax issues. A correct understanding of these issues is key to avoid costly pitfalls or incurring involuntarily in tax infringements. Common issues that must be addressed are:
- Obtaining a Number of foreign Person (NIE, for its Spanish acronym)
- Registering in the Tax Office and getting a Tax Identification Number (called NIF, for its Spanish acronym)
- Applying for the non-resident status (also called, “Beckam Law”)
- Registering as a self employee in the Tax Office
- Registering in the Social Security Office
- Enrolment in the Public National Health Service to enjoy
- Personal Income Tax compliance
- Foreign assets disclosure requirements
- Determining the tax residence status
- Tax planning for high net worth tax payers
Some of these issues may seem straightforward. However, our experience is that many people tend to choose sub-optimal decisions or, even worse, mistaken options. Let us analyze a few examples:
One feature of the Spanish tax residence rules is that during one single fiscal year a taxpayer cannot be resident for one period and non-resident for another period. That is, during a calendar year, the taxpayer is either resident or non-resident, but cannot be both. Therefore, if an alien moves to Spain during the first semester of any year, he would be deemed to be resident for the whole year, and taxed as a resident for the foreign earnings corresponding to the period prior to the transfer. This can result in double taxation. Therefore, careful consideration as to the timing of the move is highly recommended. We advice our clients what to do (and what to avoid) before moving to Spain.
Since the reintroduction of the Net Worth tax a careful structuring of the tax payer assets, frequently using investment companies, can dramatically reduce the tax burden for the tax payer and also mitigate the taxes to be paid for their heirs.
The option for the non-residence status, which basically allows the tax payer to be taxed at a flat tax rate of 19 % (for European Union residents) or 24 % (non EU residents) on their Spanish source income seems the best course of action, and certainly is for high income earners. However, standard employees should consider waiving this regime, because the standard Personal Income Tax may turn out to be better for them, due to the numerous allowances and reliefs. We customarily analyze the different scenarios available to the client in order for them to make the right tax choice.
Pensioners also need to determine where they have to pay tax on their pensions or savings. A careful review of the applicable Tax Treaty and the type of income is absolutely necessary. Many people need to know in advance what is their expected future tax burden before taking the decision to move to Spain. We have a lot of experience making these kind of analysis, even for tax payers coming from countries with trigger complex tax issues (for instance from United States).
Since we have a long dated expertise dealing with these matters, we can offer very competitive fees. Our price list for routine services are
|Obtaining a Number of foreign Person (NIE, for its Spanish acronym)||300|
|Registering in the Tax Office and getting a Tax Identification Number (called NIF, for its Spanish acronym)|
|Applying for the non-resident status (also called, “Beckam Law”)||150|
|Registering as a self employee in the Tax Office||150|
|Registering in the Social Security Office||150|
|Enrolment in the Public National Health Service to enjoy||250|
|Personal Income Tax compliance (starting from)||300|
|Foreign assets disclosure requirements (starting from)||500|
If you are interested in hiring our services please feel free to contact us.