More and more professionals are opting for the telework international: live in Spain and work for a company abroad. But what says the Treasury about this? If you are a tax resident in Spain, yes, you must declare your income even if you work for the US, Germany, the United Kingdom or any other country.
When you are considered a tax resident in Spain?
The tax residence does not only depend on the passport. You are considered a tax resident if:
Spend more of 183 days a year in Spainto continuously or not.
Your centre of economic interest (such as family, home, or bank accounts) is in Spain.
If you meet any of these conditions, you are required to declare in Spain all of your worldwide income, including those who come from foreign companies.
What taxes do you pay if you work from Spain?
1. Personal income TAX (Tax on Income of Physical Persons)
You should be taxed as any resident worker. Your income is considered to be earnings from work (if you have a contract) or yields of economic activity (if you're self-employed), and applies the scale progressive income TAX.
2. Social Security contributions
Depends on your situation:
If you are not traded on the country of origin and there is a bilateral agreementyou'll have to pay in Spain.
If you work as a autonomous, you must register and pay your monthly fee to the Social Security.
How to properly declare your income?
If you are employee with foreign contract
Your foreign company do not withhold income TAX, therefore you must regularizarlo in your statement of the annual rent (model 100). Although you do not have payroll Spanish, Hacienda expected to report such income.
If you work as a freelance or self-employed
You'll need to:
Issue invoices.
Present models quarterly (130, 303 if there is VAT, etc).
Applying the VAT only if you pay services to customers in the EU and are subject to reverse charge.
How can I avoid paying taxes twice?
Yes! Spain has agreements to avoid double taxation with the majority of countries (such as U.S., Germany, France, etc). This means that if you already paid taxes in the country of origin, you can deduce in your statement Spanish. To do this, you must keep supporting documents and properly implement the agreement by the model 100.
What happens if I do not declare my income?
To work for a foreign company you are still required to declare. It is increasingly easy for the Treasury department to detect unreported income thanks to the new international agreements on the exchange of tax information.
If you do not regularizas your situation, you may be faced with:
Economic sanctions.
Surcharges declaration out of time.
Loss of tax benefits.
Better to prevent than to pay more
If you are working from Spain for a foreign company and you are a tax resident, you are required to declare that income. The key is to know how to do it correctly: to understand whether you need to register as self-employed, you declare it as an employee or apply deductions for double taxation.
Do you have questions about how to declare your foreign income?
From our boutique specialized prosecutor we will help you to avoid mistakes, pay what is fair and comply with the Treasury without complications.
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