Working for a UK company while living in Spain

Spain BeachNow here’s a topic that I wish I had an answer too. Basically I brought a house in Spain a few years ago and I want to move out there to live in it. I work as a software engineer for a UK company on their PAYE system and they are happy for me to move to Spain. I currently live 2hrs 30mins from the companies head office anyway and all my work is done online via the internet so working from Spain makes no difference to them at all.

The big issues here are how it will work from a national insurance and tax perspective. I know there are double taxation agreements in place so I shouldn’t end up paying tax twice whether I pay it in the UK or in Spain. What I really need to find out is what exactly I need to do.

Researching on the internet I’ve found one possible solution. Apparently (don’t quote me on this) if you call the inland revenue and explain the situation they will give a tax code which essentially makes you tax exempt in the UK. So the company is essentially paying the salary gross. Then is will be my responsibility to file a tax return in Spain and declare the income that I have made from that job. Therefore I remain an employee of the UK company (thereby keeping all my human resources rights, such as holidays, redundancy allowance etc) but I will be paying my tax and national insurance in Spain. If there is anyone out there than can confirm or deny this for me that would be greatly appreciated.

I need to be on the Spanish tax system and social security system as I am about to have a young family (Baby due Aug 2013) and it’s imperative that we are all covered by the state healthcare system.

This post is probably going to become a regularly updated post over the coming weeks so please do read my other blog entries and keep checking back for further updates. If I get not response/comments from anyone via this blog I’ll keep you all updated with my own findings.

Happy money making.

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