Tax in Spain

spacehopper_2

Hello,

I have been living in Spain for the last 4 months but I am still a registered UK citizen. I hope to be hear for a least another year or maybe longer.

I want to know how living here, studying Spanish will affect my National Insurance contributions and my pension. Should I pay it in full at the end of the financial year?

My partner is working as a teacher, partly on a contract for a school who will be paying his tax here but he also has private classes. Should he be paying the tax in Spain or to the UK? Which is better and what happens with his NI contributions here?

Any advice would be appreciated.

Best wishes

Spacehopper

KathysBoy

The Spanish Tax year is the full calendar year. If you reside in Spain for 183 days or more during the year, then you are liable to pay spanish tax on your earnings, you don't have a choice as where you can pay tax.

The UK tax year runs from April to April, and if you spend more than 183 days in the UK during the tax year, then you are liable for UK tax. To mitigate you paying tax there is a double taxation agreement between the UK and Spain, which means you only have to pay once (i.e if you pay in one country, you get credit in the other). So, if you stay in Spain until the end of March, you won't be a UK tax resident for 2011/2012.

The spanish tax system is self assessment, and you submit a return in the second quarter of the year following, so the return for 2011 is due around May/June 2012. You will receive an allowance, but tax rates are slightly higher than in the UK.

You need to register as a tax resident (but you still remain a british citiaze) before you submit a return. Lots of people (including Spanish) use someone (gestoria) to submit their return for them (cost is around €50 euros).

This is quite an informative site (in english), and they will help you register and submit a return (can all be done online) for a reasonable price. I have used them personally and they will provide email advice on your situation (again for a reasonable cost). There are other sites as well.

As for National Insurance, contributions here will count towards a spanish pension, but you can make voluntary contributions in the UK, if you're intending to return in the near future. HMRC website has plenty of information on this, try this link here

Cook_County

Because you are not in full time employment abroad under a contract that includes a complete UK tax year, under normal HMRC practice you are still UK resident and taxable in full in the UK on any Spanish income. You can however claim credit in the UK on your UK tax return for any Spanish tax that you suffer.