Living in Spain having set up as a UK PLC and paying tax in the UK.. is it possibe?

Angie Garbarino wrote:


It is legally possible if one lives in Spain less than 183 days in one year. However after Brexit I am not sure anymore as this is valid (like in my case) for Europe.

Thomas T. Frost wrote:

People who do things like this usually have no or very limited understanding of international tax and social security legislation and treaties. I'm not sure what the point would be in Spain, as the Spanish taxation level is not significantly higher than the British. Such manoeuvres are more common in high-tax countries.

If you have a company registered in the UK but work in Spain, then you need to establish where that company and its employee(s) are liable for income tax, corporation tax, social charges and possibly other charges.

The first place to look up is the relevant double tax agreement, in the case of the UK and Spain available on https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf :

'1. The profits of an enterprise of a Contracting State shall be taxable only in that
State unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but only so much
of them as is attributable to that permanent establishment.'

I.e., if the company carries out activities in Spain, it will be liable for tax in Spain.

'1. Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other State. '

So if that company pays you dividends, they are taxable in Spain.

'1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is exercised in
the other Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.'

So your salary would be taxable in Spain.

Then you need to find out where to pay social charges. As a resident of Spain, you must abide by Spanish employment and social security law.

You'd just end up with all sorts of legal and fiscal entanglements that could come crashing down if the local authorities found out about it, possibly bankrupting you and your company in the process.

I guess people who do such things think they are clever, but they are most likely just committing tax evasion.

If you live and work in Spain, you need to follow Spanish law and pay Spanish taxes and social charges, and if you don’t like it, it would be better to go and live in a country that offers the conditions you want.

Michael Boone wrote:

I've heard rumours about this sort of thing, nothing more. Would be interested to know if this is possible. I'm currently living in Spain and paying tax and SS there, so this is not a viable option any time soon. I just wondered if anyone has done this (perhaps I've not used the right terms but maybe something similar to this?). This is purely out of curiosity.

Thomas T. Frost wrote:



Things are much more complicated than simply applying a global 183-day rule, and any such 183-day rule would apply to a natural person, not a company.

Tom in London wrote:

I always assume that the tax authorities of various countries would, as a matter of course, be watching these discussion forums.

[Edited at 2023-01-30 12:32 GMT]

Tom in London wrote:

I always assume that the tax authorities of various countries would, as a matter of course, be watching these discussion forums.

[Edited at 2023-01-30 12:32 GMT]