| Pages in topic: [1 2] > | TAX in Spain for non residents, when invoicing for services from abroad Thread poster: Lidia Morejudo
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Lidia Morejudo 
United Kingdom
Local time: 16:41
English to Spanish
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This is new to me. I have never had any issue. However, somebody I know who does not do translations but he writes reports for clients in Spain has been contacted by the Spanish Inland Revenue (Hacienda) saying he owes tax for the last few years. Basically, he moved to the UK, and now is a UK based freelancer registered in the UK. But as per the Spanish Inland Revenue, if a non-resident provides a service to a company or somebody in Spain, basically a service which is going to be used in Spain, ... See more This is new to me. I have never had any issue. However, somebody I know who does not do translations but he writes reports for clients in Spain has been contacted by the Spanish Inland Revenue (Hacienda) saying he owes tax for the last few years. Basically, he moved to the UK, and now is a UK based freelancer registered in the UK. But as per the Spanish Inland Revenue, if a non-resident provides a service to a company or somebody in Spain, basically a service which is going to be used in Spain, they need to pay 24 % for the IRPF (income tax) to Spain. The UK and Spain have an agreement to avoid double taxation, however, 24 % is higher than the 20 % he would pay in the UK, and most importantly, there is the headache of having to do all the paperwork for Spain and I guess also the UK. Spain as usual not helping themselves to attract investment and development...
This is the first I had heard of this, anyway. I had never heard of any translator working with Spanish agencies that had this issue. Is this something you have come across? ▲ Collapse
| | | | | | Lidia Morejudo
United Kingdom
Local time: 16:41
English to Spanish
+ ...
TOPIC STARTER | Non resident | Nov 24, 2023 |
Thanks for that. I had seen these posts. However, it's not to do with the certificate of residence. The issue is with the part of the Spanish regulation that says that no residents are also required to pay tax to Spain if delivering services that are going to be used in Spain.
In this case, the Spanish inland revenue know he is not a resident, that's a non-issue. They are saying that because his services are "being used" in Spain, he is liable to pay Spanish tax. He still has to pay that ... See more Thanks for that. I had seen these posts. However, it's not to do with the certificate of residence. The issue is with the part of the Spanish regulation that says that no residents are also required to pay tax to Spain if delivering services that are going to be used in Spain.
In this case, the Spanish inland revenue know he is not a resident, that's a non-issue. They are saying that because his services are "being used" in Spain, he is liable to pay Spanish tax. He still has to pay that tax to Spain, even if he lives in the UK. He wouldn't be liable for that income tax in the UK, as he would be paying it to Spain, however, the 24 % in Spain is higher to what he would be paying in the UK, and still he would need to submit a tax return in the UK and in Spain.
I am just wondering how/if people have got around this having to pay tax to Spain as a non resident just because their work/service is being used in Spain. Is there a work around that? ▲ Collapse
| | | | Jo Macdonald
Spain
Local time: 17:41
Italian to English
+ ...
| Tax resident in the UK or not? | Nov 24, 2023 |
This sounds like the Spanish Inland Revenue have something (like a phone bill) that they think is proof he is still residing in Spain.
If I invoice services to the UK from Spain it's an export invoice. I pay income tax in Spain because that's where I'm a resident for tax purposes.
If he can prove he's residing in the UK and not spending more than half the year in Spain, send hacienda the UK tax returns and residence certificate or company house registration and tell them to shove it.
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Tom in London
United Kingdom
Local time: 16:41
Member (2008)
Italian to English
| I've heard this nonsense many times | Nov 24, 2023 |
Lidia Morejudo wrote:
.....he is a UK based freelancer registered in the UK
As a UK-based freelancer who I assume is resident for tax purposes in the UK, he is required to pay UK taxes and to comply with UK requirements.
It would be illegal for him to attempt to comply with the tax requirements of any other country (and would probably also be impossible).
I've heard about this many times: ill-informed Spanish accountants who think that they can make residents of foreign countries pay Spanish taxes. It's insane!
Imagine what it would be like if you had to comply with the tax returns of every country in which your clients are resident. You might have clients in the United States, in South Africa, in Lebanon, etc.. Imagine if you had to comply with the tax requirements of all those countries.
[Edited at 2023-11-24 18:19 GMT]
| | | | Tom in London
United Kingdom
Local time: 16:41
Member (2008)
Italian to English
| Deleted because posted twice by mistake | Nov 24, 2023 |
xxx
[Edited at 2023-11-24 22:14 GMT]
| | | | Lidia Morejudo
United Kingdom
Local time: 16:41
English to Spanish
+ ...
TOPIC STARTER | Hacienda says so | Nov 24, 2023 |
In all logic, it makes sense that if you don’t live and work in Spain you don’t pay tax there. However, I checked and on the Hacienda page it does say that non-residents are liable for IRPF in Spain if they are paid for services used in Spain. And for non-EU non-residents it is 24%.
Apparently, that’s what Hacienda are using against him.
Even though what he does is writing texts and selling them to the client, who is the one who “uses” them in Spain.
I guess that to ... See more In all logic, it makes sense that if you don’t live and work in Spain you don’t pay tax there. However, I checked and on the Hacienda page it does say that non-residents are liable for IRPF in Spain if they are paid for services used in Spain. And for non-EU non-residents it is 24%.
Apparently, that’s what Hacienda are using against him.
Even though what he does is writing texts and selling them to the client, who is the one who “uses” them in Spain.
I guess that to fight that decision he might end up spending all his money on legal fees. ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 16:41
Member (2008)
Italian to English
| Not used in Spain | Nov 24, 2023 |
Lidia Morejudo wrote:
....d on the Hacienda page it does say that non-residents are liable for IRPF in Spain if they are paid for services used in Spain.
But the service is performed in the UK. It is the Spanish client who uses the translation, in Spain.
I have only worked for a few Spanish clients and this absurd idea has never come up. My invoices are very clearly issued in the UK for a service provided in the UK.
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Tony Keily
Local time: 17:41
Italian to English
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| Not all non-residents are equal | Nov 25, 2023 |
If an LSP provides a service in Spain, the automatic assumption is that VAT and IRPF must be paid in Spain, because, in the absence of a tax cert, the Spanish authorities don't know if they have a DTA with the country of residence of the service provider, existence of a DTA constituting one of the "... See more If an LSP provides a service in Spain, the automatic assumption is that VAT and IRPF must be paid in Spain, because, in the absence of a tax cert, the Spanish authorities don't know if they have a DTA with the country of residence of the service provider, existence of a DTA constituting one of the "exceptions to the obligation to withhold". (https://sede.agenciatributaria.gob.es/Sede/en_gb/ayuda/manuales-videos-folletos/manuales-practicos/manual-tributacion-no-residentes/retenciones-sobre-rentas-obtenidas-sin-permanente/rentas-sujetas-retencion.html)
The tax certificate triggers the exception: "When withholding is not practiced by application of the exemptions of an Agreement or is practiced with the taxation limits established therein, it will be justified with a certificate of tax residence issued by the corresponding tax authority, which must expressly state that the taxpayer is a resident in the sense defined in the Convention. "
https://sede.agenciatributaria.gob.es/Sede/en_gb/ayuda/manuales-videos-folletos/manuales-practicos/manual-tributacion-no-residentes/retenciones-sobre-rentas-obtenidas-sin-permanente/documentacion.html
[Modificato alle 2023-11-25 12:37 GMT] ▲ Collapse
| | | | Zea_Mays
Italy
Local time: 17:41
Member (2009)
English to German
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I'm assuming that the person in question has Spanish nationality and now lives in the UK where he works as a freelancer. I also assume that before emigrating to the UK, he was taxed in Spain. When he emigrated to the UK, did he inform the Spanish authorities, especially the tax authorities? Maybe that's where the problem lies...
| | | | Marina Aleyeva
Israel
Local time: 18:41
Member (2006)
English to Russian
+ ...
| Certificate of tax residency | Nov 25, 2023 |
The Spanish companies I have worked with wanted me to provide a certificate of tax residency. So I did, once a year. It should be available from the tax authority of that other country and should read something like "This is to confirm that John Doe is a resident of Atlantis for tax purposes".
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Zea_Mays
Italy
Local time: 17:41
Member (2009)
English to German
+ ...
| where services/products are "being used" applies for VAT in the EU | Nov 25, 2023 |
- for which there is the reverse charge mechanism for b2b transactions.
As for IRPF:
"Non-residents are liable for this tax on any income arising in Spain, such as a money deposits with a Spanish bank, having a property in Spain, or receiving proceeds from a business activity in Sp... See more - for which there is the reverse charge mechanism for b2b transactions.
As for IRPF:
"Non-residents are liable for this tax on any income arising in Spain, such as a money deposits with a Spanish bank, having a property in Spain, or receiving proceeds from a business activity in Spain. "
https://www.spainlawyer.com/legal-guide/personal-income-tax-irpf-in-spain/
[Bearbeitet am 2023-11-25 18:57 GMT] ▲ Collapse
| | | | | Generation of income vs export | Nov 26, 2023 |
Lidia Morejudo wrote:
This is new to me. I have never had any issue. However, somebody I know who does not do translations but he writes reports for clients in Spain has been contacted by the Spanish Inland Revenue (Hacienda) saying he owes tax for the last few years. Basically, he moved to the UK, and now is a UK based freelancer registered in the UK. But as per the Spanish Inland Revenue, if a non-resident provides a service to a company or somebody in Spain, basically a service which is going to be used in Spain, they need to pay 24 % for the IRPF (income tax) to Spain. The UK and Spain have an agreement to avoid double taxation, however, 24 % is higher than the 20 % he would pay in the UK, and most importantly, there is the headache of having to do all the paperwork for Spain and I guess also the UK. Spain as usual not helping themselves to attract investment and development...
This is the first I had heard of this, anyway. I had never heard of any translator working with Spanish agencies that had this issue. Is this something you have come across?
Hacienda can tax income generated in Spain.
However, this income is generated en UK. The services are produced in UK and exported to Spain, i.e. no income is generated in Spain. 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.
The problem with Hacienda is that they are not looking for justice, they are looking for income. So it can be extremely hard to get the point across.
| | | | Tom in London
United Kingdom
Local time: 16:41
Member (2008)
Italian to English
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.
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