Social Security question for David

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Zofia
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Social Security question for David

Postby Zofia » Sat Oct 03, 2009 4:42 pm

Can I choose to pay Social Security even if I am not paying tax here? I currently work for a UK company and am paid in the UK system into my UK bank. Although I 'physically' do the work here, it is all online and my computer is networked to the London office. I am self employed and invoice the company monthly. I think I probably should be paying tax here, but in the UK system I can claim my tax allowance, which I can't do in the Spanish system, so am therefore better off doing it this way, and my company are happier paying me in sterling etc.

However, this leaves me with no medical cover. Can I choose to pay the monthly Social Security payment so I and my children can get healthcare? Or do I have to be either working or self-employed in Spain? My OH works in the UK and he is covered by the E111 (or whatever it is called these days), or he uses the NHS when over there.
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Re: Social Security question for David

Postby El Cid » Sat Oct 03, 2009 5:19 pm

If you live here for more than 183 days in a year you are tax resident and you must pay Spanish tax on your worldwide income - it isn't an option.

If you generate any income from working while you are in Spain, irrespective of how long you spend here, Spanish tax is due. Just because the work is online that makes no difference - you are working here even if the results of your labour benefit someone in Afghanistan!

If you are working self employed then you have no option but to register as Autonomo and pay the social security payments.

If for some reason you still have tax legally deducted in the UK you can claim that back against your Spanish tax bill.

It's that simple. Anything else means you are working illegally in Spain.

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Re: Social Security question for David

Postby hillybilly » Sat Oct 03, 2009 5:32 pm

If your spouse lives and works in the UK but you live in Spain, then you might be able to receive health cover here using form E109. (This is totally ignoring your own work/tax issues which Sid has addressed above).

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Re: Social Security question for David

Postby Retro P » Sat Oct 03, 2009 8:37 pm

You can no longer get away with this one, the authorities realised about 7 years ago that foreigners were only doing it in order to get free health care etc, much easier (and probably no more expensive) to get sanitas or similar.
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Re: Social Security question for David

Postby ValL » Sat Oct 03, 2009 9:05 pm

These criteria do not apply to all people who live here more than 183 days , my late husband lived here all year our only home is here. Some people fall into different catergories. He earned no wage here, paid no tax here and was COMPLETELY legal.

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Re: Social Security question for David

Postby markwilding » Sat Oct 03, 2009 10:07 pm

Are all these rules so clear cut? I pay social security In Spain.and have a blue heath card which entitles me to free health care in Spain. But am I not entitled to free health care when on short trips back to the UK as long as I haven't gone back with a serious illness with the sole intention of not wanting to use the Spanish system but preferring the uk one?
Hmmm maybe thats not the same

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Re: Social Security question for David

Postby Retro P » Sat Oct 03, 2009 10:33 pm

ValL wrote:These criteria do not apply to all people who live here more than 183 days , my late husband lived here all year our only home is here. Some people fall into different catergories. He earned no wage here, paid no tax here and was COMPLETELY legal.
And your point ValL is?
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Re: Social Security question for David

Postby El Cid » Sat Oct 03, 2009 10:47 pm

ValL wrote:These criteria do not apply to all people who live here more than 183 days , my late husband lived here all year our only home is here. Some people fall into different catergories. He earned no wage here, paid no tax here and was COMPLETELY legal.
I'm afraid they do - there are no exceptions to this rule.

Many expats have UK government pensions which are taxed in the UK (Civil servants, teachers etc).

They are still liable for tax in Spain but will probably not end up paying any as their other income (UK state pension etc) may well be small enough not to generate any tax due.

However, in most cases they are still obliged to fill in an annual tax declaration even if it shows no tax due.

Failure to do this means that they will never be legally recognised as tax resident and when Capital Gains Tax or Inheritance Tax becomes due, they will not be able to claim the very generous allowances which are only available to people who are registered as tax resident.

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Re: Social Security question for David

Postby ValL » Sun Oct 04, 2009 8:32 am

I have to disagree, my late husband lived here under quasi 'diplomatic' status and was not paid in Spain nor UK He was paid by and paid tax in 'Europe' There are a number of people in the this category. We were resident for some purposes and not for others, a peciluar situation but all legal.

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Re: Social Security question for David

Postby El Cid » Sun Oct 04, 2009 8:56 am

I stand corrected. However it is still important to check that your residency status is such that you gain all the tax benefits available to tax residents with regard to assets in Spain rather than income. Also any income not connected with the diplomatic position is not necessarily exempt from local taxes.

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Re: Social Security question for David

Postby Zofia » Sun Oct 04, 2009 2:59 pm

I know a LOT of people here who live her but are not 'in the system' who, either like me, get paid in the UK (either travelling there to work or WFH), or who have kept their UK address and 'pretend' they still live there when it comes to invoicing. Some of these have lived here for a few years.

I will. one day, get myself sorted out and become 'legal'. I'm just rather loathe to lose all my tax allowances....it will make quite a big difference to my income, as I only work part time. Losing my allowance along with having to pay autonomo would amount to 1000s.

What do people do who don't work? If I didn't work, and my OH carried on work in the UK (which is much less than 183 days a year), what would my situation be then regarding health care etc?

And it hasn't answered my question as to if I am allowed to pay SS anyway, without putting forward any income in my tax return.
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Re: Social Security question for David

Postby Retro P » Sun Oct 04, 2009 4:13 pm

Zofia wrote:

And it hasn't answered my question as to if I am allowed to pay SS anyway, without putting forward any income in my tax return.

Zofia, if you have no "income" then you have no job, I repeat, you can no longer get away with this scam.
I'm pretty sure the spanish authorities are fed up with many of the foreigners living here trying to screw the system, a simple question why do you need to do it, can't you be legal??
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Re: Social Security question for David

Postby Zofia » Sun Oct 04, 2009 5:03 pm

why do you need to do it
simply for my tax allowance, Under the Spanish system I will get taxed on everything I earn (which isn't much), under the UK system I get a chunk tax free. Is it also true that I would have to charge IVA to my employers? They would not pay it! I would probably end up losing my job as they couldn't afford to keep me on....

And before anyone says 'why come to Spain if you can't afford to work?' the original plan was for me to be employed by a Spanish branch of my company, but because of 'crisis' they have put it on hold, and asked me to go freelance in the meantime.

What would I do if I had no job? Just another thing I'm interested in......
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Re: Social Security question for David

Postby Jool » Sun Oct 04, 2009 5:10 pm

Zofia, sorry but I don´t understand why you lose your tax allowances? There are personal tax allowances here in Spain as well and you simply claim those instead.....and if you register here as an autonomo empresarial then you can deduct expenses quarterly.......you sound scared of the spanish system yet it seems to work pretty well if you use a good gestor to register you with Hacienda in the first place.

You cannot pay Seg social and not have an income to declare, if you do this for a couple of trimestres in a row they can de-register you and leave you with no cover.........

I would investigate the VAT situation further as there are exemptions and other rules relating to the differing rates charged between Spain and the UK and thus you may be able to invoice without charging IVA.............

As someone who works here legally and struggles a lot sometimes to do so I get really annoyed at the cherry picking attitude of others who live here and think they can get the benefits without paying due taxes - it distorts the market unfairly for those working legally as the illegals can under-cut them in price every time (in any business) and thus those complying with the law lose out all round. This is not a personal attack on you as you are clearly not doing this I am speaking generally as there are so many people doing this and if we were all still living in the UK and immigrants there were doing this we would all be enraged about it.

Post edited in view of Zofia´s last answer

Zofia
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Re: Social Security question for David

Postby Zofia » Sun Oct 04, 2009 5:25 pm

there are personal tax allowances here in Spain as well and you simply claim those instead
Really? I asked my gestor about that and he said that there were none for the self-employed, in fact he didn't have a clue what I was talking about. Will look into that again, and if it is the case it puts a whole new slant on it. I don't mind paying the €265 a month in itself, as it will be worth it for the health care and pension (not that I would get much, I'm 50 already!).

Will ask about the IVA because I am not providing any sort of 'service', I am really employed by one company to do the job I have done for the last 5 years, am just paid in a different way as they couldn't carry on with PAYE with me living here. I still get sick pay and holiday pay.
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Re: Social Security question for David

Postby spanish_lad » Sun Oct 04, 2009 7:04 pm

zofia, i was going to pm you., i have good news. its nowhere near as expensive or scary as you think.
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Re: Social Security question for David

Postby markwilding » Sun Oct 04, 2009 7:13 pm

Is the 265euros not social security payments and income tax a different thing?
I would like to go self employed and do a little bit more work but I was told I would have to pay a the minimum no matter how little I do or earn.
At the moment I'm employed for about 15 hours work per week for 9 months of the year but the company I work for doesn't want to declare everything which seems to be a typical thing here and there's nothing I can do about it. I can claim unemployment in the summer which I have done some years and others haven't.
Up to now the self employed haven't been able to claim unemployment benifit although I've seen that this is going to change soon
When you earn a little that 265euros minimum is quite a large chunk

I'm lucky though as my wife works in the Spanish civil service and has for many years including when we lived in the UK
A little more information would be appreciated

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Re: Social Security question for David

Postby Jool » Sun Oct 04, 2009 7:56 pm

I receive personal tax allowances working here in Spain, comparable to the UK tax free band rates, and then % tax is levied on a sliding scale according to income, exactly the same as in the UK. You can also claim mortgage relief too.

You have to pay your Seg Social every month regardless of income but there is a system whereby a clever employer can claim reduced hours for you and thus reduced Seg Social.......but if self employed its the 264 per month. However this sum is deducted from your gross taxable income......

I would suggest you take your gross income to a proper spanish tax adviser/gestor here and find out how much tax you would pay on your annual income once seg social is taken out of the equation as at the moment you seem to have received a lot of inaccurate information and I have been self employed in Spain for many years so know how it works. There was a list of the spanish tax allowances (ie threshold at which you start paying tax) in english on the internet but I cannot find it for this year at the moment, but I will post it when I do. This information is also available in You and the Law in Spain.

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Re: Social Security question for David

Postby Jool » Sun Oct 04, 2009 7:59 pm

Taken from spainexpat.com
Personal allowances for Spanish income tax purposes are €5,151, which increases to €6,069 for persons over age 65 and €6,273 for persons over age 75.

Child allowances for Spanish income tax purposes are: €1,836 for the first child, €2,040 for the second child, €3,672 for the third child and €4,182 for additional children. In addition, Spain has a maternity allowance of €2,244 for each child under three years old.

Earned income above these allowances is taxed at the following rates:

Income (above allowances) Spain’s national tax rate Provincial tax rate Total tax rate
€0 - €17,707 15.66% 8.34% 24%
€17,707 - €33,007 18.27% 9.73% 28%
€33,007 - €53,407 24.14% 12.86% 37%
€53,407 and above 27.13% 15.87% 43%

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Re: Social Security question for David

Postby Zofia » Sun Oct 04, 2009 9:12 pm

Personal allowances for Spanish income tax purposes are €5,151, which increases to €6,069 for persons over age 65 and €6,273 for persons over age 75.
But is this for self-employed people too? I thought it was only for employed people. If this is for self-employed people too, that is fab and I would have no hesitation in registering as self-employed again (I did register last year but only for a month, before my employers changed their minds about my employment status).

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