| Pages in topic: < [1 2] | TAX in Spain for non residents, when invoicing for services from abroad Thread poster: Lidia Morejudo
|
|---|
| Probably the worst option | Nov 26, 2023 |
Tom in London wrote: Enrique Bjarne Strand Ferrer wrote:
.....He has to claim that never set his foot in Spain during these years (except for vacations), and that he for that reason did not generate any income in Spain, but that he exported a service.
He actually doesn't have to do anything. What happens in Spain has got nothing to do with him. It would probably, in fact, be illegal for him to engage with the Spanish tax authorities.
You suggestion is probably the worst he can do.
Spanish authorities have contacted him, and if he doesn't repond, he will face an administrative decision. If he doesn't appeal this decision, it will become legally binding. Then he will be in debt to Spain, will be taxed accordingly going forward and risk having his earnings in Spain seized by the authorities.
| | | | Tom in London
United Kingdom
Local time: 18:02
Member (2008)
Italian to English
Enrique Bjarne Strand Ferrer wrote:
You suggestion is probably the worst he can do.
Spanish authorities have contacted him, and if he doesn't repond, he will face an administrative decision. If he doesn't appeal this decision, it will become legally binding. Then he will be in debt to Spain, will be taxed accordingly going forward and risk having his earnings in Spain seized by the authorities.
I've ordered a large bag of popcorn. This is going to be good.
| | | | RobinB 
United States
Local time: 12:02
German to English
Tom in London wrote:
It would be illegal for him to attempt to comply with the tax requirements of any other country (and would probably also be impossible).
Not illegal, but certainly unusual. For example, although I'm tax-resident in the US, I have to register for VAT in the EU if I provide services to individuals and entities that are not registered for VAT in the EU (essentially, retail clients, government agencies, and European authorities). I then have to charge them VAT at the national rate of their member state of residence, and remit the VAT collected quarterly to the tax authorities in one of the EU member states.
Similarly, when I write invoices to clients in Germany, I have to include approved boilerplate to the effect that the reverse-charge mechanism applies. The German tax authorities can't come after me (or my company) if I don't, but they can, if they wish, deny recognition of my invoices for tax purposes, meaning that my clients can't claim them as tax expenses. So constructively, I have to comply with German tax requirements.
Cross-border taxation is a minefield, whichever way you look at it.
| | | | | No tax due according to the double tax treaty | Nov 30, 2023 |
The double tax treaty between Spain and the UK can be found here:
https://assets.publishing.service.gov.uk/media/5a7f1a77e5274a2e87db3d01/spain-dtc_-_in_force.pdf
Article 3
GENERAL DEFINITIONS
(k) the term “business” includes the performance of professional services and of
other activities of a... See more The double tax treaty between Spain and the UK can be found here:
https://assets.publishing.service.gov.uk/media/5a7f1a77e5274a2e87db3d01/spain-dtc_-_in_force.pdf
Article 3
GENERAL DEFINITIONS
(k) the term “business” includes the performance of professional services and of
other activities of an independent character;
Article 7
BUSINESS PROFITS
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.
Article 11
INTEREST
1. Interest arising in a Contracting State and beneficially owned by a resident of
the other Contracting State shall be taxable only in that other Contracting State.
Article 20
OTHER INCOME
1. Items of income beneficially owned by a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Convention, shall be taxable only
in that State.
This follows the OECD model for such treaties and is very clear: no income tax is due in Spain from someone without any establishment in Spain providing services to Spain carried out in the UK, so the Spanish tax hunters need to be reminded that this treaty obliges Spain and that their national law cannot overrule an international treaty. What they are doing is completely bonkers and incompetent. Maybe the dimwit in question confuses it with VAT, where Spanish VAT would be due in many (but not all) cases.
Someone mentioned interest from Spain, but according to the treaty, interest from Spain earned by a UK resident is only taxable in the UK. ▲ Collapse
| | |
|
|
|
Tom in London
United Kingdom
Local time: 18:02
Member (2008)
Italian to English
Thomas T. Frost wrote:
.....What they are doing is completely bonkers and incompetent.
Excellent work Thomas - thank you for doing it - and look how much of everybody's time they are wasting on this!
[Edited at 2023-11-30 10:29 GMT]
| | | | | Spanish tax info | Nov 30, 2023 |
https://sede.agenciatributaria.gob.es/Sede/en_gb/ayuda/manuales-videos-folletos/manuales-practicos/manual-tributacion-no-residentes/tributacion-rentas-comunes-obten-espana-nr/rendimientos-derivados-actividades-economicas/rend-activid-economicas-sin-ep.html
This Spanish tax page refers to a quite convoluted rule:
Income from economic activities obtained without the mediation of a permanent establishment
Internal regulations
Regulations: article 13.1.b) Law IRNR
In accordance with internal regulations, the income from economic activities carried out without the mediation of a permanent establishment located in Spanish territory is understood to be obtained in Spanish territory, in the following cases:
When economic activities are carried out in Spanish territory.
[…]
When it comes to provision of services used in Spanish territory. When these provisions of services partially support economic activities performed on Spanish territory, earnings considered to have been obtained in Spain will only be those supporting the activity performed in Spain.
Whatever ‘earnings considered to have been obtained in Spain will only be those supporting the activity performed in Spain’ is intended to mean is not clear, but the page goes on to refer to the same tax treaty I just did and confirm the same thing, i.e. that no tax is due in the case described. Maybe a Spanish native can make sense of the Spanish version of the sentence.
If the person referred to also has an establishment in Spain and carries out some activities there, such activities will be taxable in Spain according to the treaty. ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 18:02
Member (2008)
Italian to English
| Money for old rope | Nov 30, 2023 |
Thomas T. Frost wrote:
Whatever ‘earnings considered to have been obtained in Spain will only be those supporting the activity performed in Spain’ is intended to mean is not clear,......
Call me cynical but this may been made deliberately ambiguous.
Going beyond the narrow field of translation services, I imagine it is affecting many other service providers.
= a lot additional work for Spanish accountants and tax lawyers.
| | | | | Countries without an agreement with Spain | Nov 30, 2023 |
Translators working in countries that do not have tax treaties with Spain, such as notably Denmark, could fall foul of this insane rule in Spanish tax law if they supply translations to clients in Spain.
Denmark had a treaty with Spain but then wanted to renegotiate it to tax Danish pensions paid to pensioners in Spain. This would have been a deviation from the OECD model, which gives only the country of residence the right to tax pensions. As Spain and France refused, Denmark termi... See more Translators working in countries that do not have tax treaties with Spain, such as notably Denmark, could fall foul of this insane rule in Spanish tax law if they supply translations to clients in Spain.
Denmark had a treaty with Spain but then wanted to renegotiate it to tax Danish pensions paid to pensioners in Spain. This would have been a deviation from the OECD model, which gives only the country of residence the right to tax pensions. As Spain and France refused, Denmark terminated both agreements, causing chaos in double tax matters. A new treaty was recently agreed with France, but there is still no treaty with Spain.
This is what can happen when dealing with two countries that are equally greedy in relation to trying to tax income rightfully being taxable only somewhere else. That sort of behaviour makes things more expensive and complicated for businesses and makes such countries less attractive for business and investment. France is no better, having tried to slap illegal social charges on non-residents' property in France. EU law does not allow that, since only one member state can be competent for social charges and benefits for any given person. When it's not scammers trying to cheat us, it's governments. No wonder the EU is in almost perpetual recession. ▲ Collapse
| | |
|
|
|
| Spanish lawyer is needed | Dec 1, 2023 |
From time to time I attend Spanish webinars, (free) about the matter of taxes for non residents, I can provide the name of the lawyers, at this stage for fighting with hacienda a lawyer is paramount.
I know because I had similar problems about double taxation for the "State" Pension I got from Italy for the reversibility pension of my deceased husband. When hacienda insists a lawyer is needed.
[Edited at 2023-12-01 09:19 GMT]
| | | | | It depends which kind of pension | Dec 1, 2023 |
Thomas T. Frost wrote:
This would have been a deviation from the OECD model, which gives only the country of residence the right to tax pensions.
A pension provided directly from the State of origin pays taxes in the State of origin (for people who worked for the State). This is what also the treaty says. I receive a "State" reversibility Pension from Italy of my deceased husband and had to check. I am Italian citizen with residence in Spain,
[Edited at 2023-12-01 09:06 GMT]
[Edited at 2023-12-01 09:07 GMT]
| | | | | Pensions from having worked for public bodies | Dec 1, 2023 |
Angie Garbarino wrote: Thomas T. Frost wrote:
This would have been a deviation from the OECD model, which gives only the country of residence the right to tax pensions. A pension provided directly from the State of origin pays taxes in the State of origin (for people who worked for the State). This is what also the treaty says. I receive a "State" reversibility Pension from Italy of my deceased husband and had to check. I am Italian citizen with residence in Spain,
You are correct that pensions from having worked for public bodies are usually taxed in the country of the public body. I was referring to other pensions such as public old-age pensions in general and private pensions but was not specific.
In the case of the Portugal-Denmark treaty, public old-age pensions are only taxed in the country of residence, whereas pensions for which contributions were deducted from the taxable income may also be taxed in the country where they arise, which is a deviation from the standard OECD model.
I never really believed in private pensions anyway, as governments can't withstand the temptation to raid those pension funds with billions piled up, as they have done in Denmark as well as the UK in various ways. And if you move to another country, further complications can arise.
| | | | | Complaints procedure | Dec 1, 2023 |
Angie Garbarino wrote:
From time to time I attend Spanish webinars, (free) about the matter of taxes for non residents, I can provide the name of the lawyers, at this stage for fighting with hacienda a lawyer is paramount.
I know because I had similar problems about double taxation for the "State" Pension I got from Italy for the reversibility pension of my deceased husband. When hacienda insists a lawyer is needed.
There must be an official complaints procedure to follow before it is necessary to waste a lot of money on a solicitor. Spain is so clearly not following their own law and the tax treaty as stated on their own web page.
| | |
|
|
|
Thomas T. Frost wrote: Angie Garbarino wrote:
From time to time I attend Spanish webinars, (free) about the matter of taxes for non residents, I can provide the name of the lawyers, at this stage for fighting with hacienda a lawyer is paramount.
I know because I had similar problems about double taxation for the "State" Pension I got from Italy for the reversibility pension of my deceased husband. When hacienda insists a lawyer is needed. There must be an official complaints procedure to follow before it is necessary to waste a lot of money on a solicitor. Spain is so clearly not following their own law and the tax treaty as stated on their own web page.
But is seems that the OP already used it.
| | | | | Complaints procedure | Dec 1, 2023 |
Angie Garbarino wrote: Thomas T. Frost wrote:
There must be an official complaints procedure to follow before it is necessary to waste a lot of money on a solicitor. Spain is so clearly not following their own law and the tax treaty as stated on their own web page. But is seems that the OP already used it.
Where do you see that?
What I see is that the OP is unaware of the tax treaty that excludes the Spanish tax and is also unaware that the Spanish online guidance says exactly the same as the tax treaty that I referred to.
The first thing to do must be to write back to them and point out these basic facts, following the complaints procedure. You don't need a solicitor to remind them about the tax treaty.
| | | | | Pages in topic: < [1 2] | To report site rules violations or get help, contact a site moderator: You can also contact site staff by submitting a support request » TAX in Spain for non residents, when invoicing for services from abroad | Trados Business Manager Lite | Create customer quotes and invoices from within Trados Studio
Trados Business Manager Lite helps to simplify and speed up some of the daily tasks, such as invoicing and reporting, associated with running your freelance translation business.
More info » |
| | CafeTran Espresso | You've never met a CAT tool this clever!
Translate faster & easier, using a sophisticated CAT tool built by a translator / developer.
Accept jobs from clients who use Trados, MemoQ, Wordfast & major CAT tools.
Download and start using CafeTran Espresso -- for free
Buy now! » |
|
| | | | X Sign in to your ProZ.com account... | | | | | |
Login to reply/comment 
Translation news
