Tax Implications for UK Remote Workers Moving to Spain Before December 2020

If you are planning to move to Spain from the UK and are working remotely, the tax implications can be quite complex. Understanding your tax obligations as a tax resident in Spain is crucial for maintaining compliance and avoiding penalties.

What Does It Mean to Be a Tax Resident in Spain?

When you move to Spain, you will likely become a tax resident there. As a tax resident in Spain, you will be required to declare your global income with the Spanish tax authorities and take advantage of the national healthcare and education systems, among other benefits provided by the Spanish state.

Income Tax in Spain

As a tax resident in Spain, you will be subject to Spanish individual income tax. This includes your income from remote employment, regardless of whether your employer is based in the UK or elsewhere. In cases where you continue to pay into a UK bank account, you may still be liable to tax in Spain based on your current center of economic activity.

Goods and Services Tax (IGIC)

For goods and services consumed in Spain, you will also be subject to the Goods and Services Tax (IGIC). This is typically applied to purchases of tangible and intangible goods and services in Spain, including your remote working arrangement.

National Insurance Contributions (NIC)

Under existing EU treaties, you may also be required to make National Insurance Contributions (NICs) or other taxes. However, if you are no longer covered by EU treaties, the situation becomes more complex. It is advisable to consult a Spanish tax specialist for guidance specific to your individual case.

Implications of Non-Residency

If, for some reason, you do not declare your status as a tax resident in Spain, you will remain a non-resident. As a non-EU citizen, you will still be subject to tax in the UK but will not be entitled to the benefits of being a tax resident in Spain, such as healthcare and education services.

The Uncertainty for UK Citizens

For UK citizens specifically, the situation is particularly uncertain due to Boris Johnson's 'Deal or No Deal' game. Under the current treaties, your income for 2020 is still likely to be taxable in the UK as your 'center of economic activity' is still considered to be in the UK for tax purposes. However, the future of these treaties is unclear, especially as the UK leaves the EU.

Advice and Resources

To navigate the complex tax landscape, it is highly recommended to consult a professional tax advisor or a Spanish tax specialist. These experts can help you understand your specific obligations, advise on any potential changes due to Brexit, and ensure you are compliant with both UK and Spanish tax laws.

Conclusion

Moving to Spain as a remote worker and UK citizen presents a unique set of tax challenges. Understanding and complying with the relevant tax laws is crucial for maintaining your financial and legal integrity. Stay informed and seek professional advice to ensure a smooth transition and a tax-efficient future in Spain.