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> In Spain, it takes 5 years before losing tax residency after you've left the country. Do you have a reference? I have never heard about that (which can happe

> In Spain, it takes 5 years before losing tax residency after you've left the country. Do you have a reference? I have never heard about that (which can happen, spain has many rules) and I doubt anyone holds to those rules but it would be good to know. I had a business in spain and as a foreign tax resident I tried to do everything by the book; the locals laughed in my face for declaring taxes at all. The system is so complex and unfriendly (the fines are high and there is world wealth tax which has fines that are probably not even legal in the EU; there are legal cases going on about it) I doubt anyone can follow the exact rules, but I tried (and probably paid way too much because of it).

petre 5y ago
I keep seeing news titles about football playes like Cristiano Ronaldo and celebrities like Shakira getting slapped with back taxes and suspended jail sentences in Spain. A complex tax system and unclear rules are just another opportunity for abuse by tax authorities. https://m.timesofindia.com/sports/football/top-stories/messi-contract-highlights-tax-burden-for-players-in-spain/amp_articleshow/80654335.cms https://m.timesofindia.com/sports/football/top-stories/messi...
- thefounder 5y ago
  The abuse is both ways...see how much tax Amazon and Apple is paying. Hint: not much!
  - CodesInChaos 5y ago
    They are paying VAT (revenue tax), but avoid corporate tax (profit tax).
    - Y_Y 5y ago
      At least in Spain a company will usually be able to avoid VAT on purchases they make. It is true that they charge and collect VAT on their sales to consumers. The majority off tax paid by these companies is on what they pay their employees.
      - tluyben2 5y ago
        This is very hard in reality though especially on goods from abroad; your NIE has to be on the invoice officially (which companies like BA do not do for you and I flew with them a lot for business) and while this is not strictly enforced, I got slapped many times on valid business purchases. The gestor told me to just deduct 75% of the deductible vat to not get onto the radar. Ugh.
        Y_Y 5y ago
        This is too real. The ultimate tax is on your time, especially as a foreigner.
    - thefounder 5y ago
      VAT is not the only tax to be paid in the EU. Not to mention they pay less VAT than the local businesses through various schemes(i.e registering the company that makes the sale in a country with lower VAT)
      - CodesInChaos 5y ago
        > i.e registering the company that makes the sale in a country with lower VAT Do they? The Amazon invoices I receive have German VAT.
      - petre 5y ago
        That doesn't work anymore and it only worked for small volumes, not bigger retailers. They previously needed a VAT number from the state the custumer was in, which was very cumbersome. Now they just add the destination state's VAT on the invoice and I think the VAT is settled between states.
    - 988747 5y ago
      VAT is not a revenue tax. VAT is the tax paid by consumers not by the company. Company only acts as tax collector. The weird thing is this: they collect VAT on everyting they sell, but then, for everything they buy (raw materials, office supplies, etc.) they can substract amount of VAT paid for those from the amount of VAT collected. So purchases by companies are basically VAT-free. And of course some tax optimisation schemes come into play here, with some companies getting ahead on VAT (like, actually getting a VAT refund from the government, instead of paying it).
- notahacker 5y ago
  What makes you think the tax authorities were the ones being abusive, and not the very expensive tax specialists hired on behalf of a class of people moaning that it's not fair that people earning €100m a year don't pay smaller proportions of their income in taxes than people earning €100k?
  - notahacker 5y ago
    All these downvotes, and not one person prepared to explain why portions of a Spain-based footballer's earnings from Spanish companies accruing to Belize based companies is the tax authorities being abusive... Or why the tax authority would prefer a situation where the tax code is sufficiently complex the Messis and their financial advisers think such an evasion scheme is worth trying to one where they just receive a percentage of his very large earnings without any fuss or court case, like your average employee of a Spanish company. The reality is the reverse: people with a lot of income to disguise and creative tax planners love finding ambiguities and imaginative interpretations of deductions and exemptions designed for other purposes, and tax authorities would rather not be chasing them through the courts years later.
- Y_Y 5y ago
  It's worth noting that there is special provision for these kinds of cases: https://en.wikipedia.org/wiki/Beckham_law https://en.wikipedia.org/wiki/Beckham_law Of course this doesn't protect you from outright tax evasion. Also there are some rules like the calculation of capital gains that differ from the US system, meaning that you are not necessarily protected from double taxation, since each system taxes a different transaction.
  - tluyben2 5y ago
    The NHR in Portugal allows this for everyone (not wealthy per se).
    - bwb 5y ago
      Anyone moving to Portugal under NHR is by definition wealthy :)
      - tluyben2 5y ago
        How so? It is attractive for more reasons than paying less tax for wealth. I know quite a lot of wfh devs who moved in the past year.
        bwb 5y ago
        ya those people are all wealthy :)
        tluyben2 5y ago
        I guess our definition of wealthy is different. There are bucketloads of 'nomads' under the NHR that have no wealth and just get money from outside PT: I am talking a few 1000 per month. What is wealth for you? The Beckham law wealth is what I would call wealth and sure there are people using nhr to move their wealth from some fund to their person within the 10 years without paying tax. However, unlike the Beckham law, for the NHR you do not need capital to benefit.
dnh44 5y ago
I too thought of moving my business to Spain until I started speaking to friends and acquaintances that had businesses in Spain. Lots of horror stories.
- david-gpu 5y ago
  Can you give us a brief idea of what they said?
  - insta_anon 5y ago
    I’d also be very interested in learning more.
  - tluyben2 5y ago
    Not the parent but from my own experience having had companies in many countries: Spain was by far the hardest and most confusing. I only had companies (4) in Andalusia, so I cannot comment on other regions; where other countries are quite logical and I am usually able to reason with the tax auditors, in Spain it was hostile and most accountants, lawyers and gestors basically told us, time and time again, to just relax and do many illegal things as you will lose boatloads of money I'd you do not. However, I like sleeping at night as do my partners so with did everything by the book and it was extremely painful to do so. There are rules on rules on rules, deducting business costs are hard if not impossible etc. And you need help for everything: in Spain there is an industry called Gestors who are not accountants but people who help navigate the bureacracy. The Spanish use them as well and there are many all over the place. So you pretty quickly find out things work if you are a tiny company (autonomo) and just don't declare any tax (put it in your matress), hire people by paying them cash etc. Or you need to be a large corp with lawyers, accountants etc to navigate things efficiently. In between you mostly just get misery. I sold and closed the companies and the people that bought them since then burnt out and quit or just adopted what my Spanish friends call 'the Spanish way', which is, quite simply basically running almost fully illegally: having a 'broken' PoS all the time (so people have to pay cash), using black funds to pay people and goods and just showing losses all the time (paying only the autonomo social security and nothing more). I would find it impossible to sleep as I simply cannot accept the thought of the Guardia stomping down the door in a few years. My friends tell me I worry too much about nothing... maybe; I would never do it again. Good to know is that Spanish taxes can go back 4 tax years which equates to about 5 years. This is shorter than most countries I did business in.
ucha 5y ago
"Taxpayers liable to PIT: Individuals of Spanish nationality who accredit their new fiscal residence in a country or territory labelled as a tax haven will not lose their status as taxpayers for Individual Income Tax. This rule is of application during the tax period in which the change of residence occurs and for the next four tax periods." https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/SPAIN-Tax-Residency.pdf https://www.oecd.org/tax/automatic-exchange/crs-implementati...
- tluyben2 5y ago
  Ah ok, that is very particular: tax havens and Spanish nationality. But thanks, I did not know that. And luckily neither applies to me!
  - ucha 5y ago
    It's even more particular, but in practice, it does affect a lot of funds, if not a lot of people - which is why they legislated. One can move to a no/low tax jurisdiction and not be a Spanish tax resident as long as they're covered by a double taxation agreement.
- tomp 5y ago
  Does this rule actually make sense? So instead of moving from Spain to e.g. Cayman Islands, you move from Spain to the UK, become UK taxpayer (in something like 180 days), cease being Spanish taxpayer, then move from the UK to Cayman Islands. Saves 4 years! This is just another example of braindead legislation created by people who are unable to consider the full spectrum of the consequences of the law (beyond just the "intended" effects) and/or their primary motivation is publicity ("look at all these great laws I passed!")
  - tkiolp4 5y ago
    In your example, the moment you move from UK to Cayman Islands, the Spanish government/tax system will know (unless you make sure you hide it... but this is another topic). At some point you won’t be a UK taxpayer, in that moment the Spanish government/tax system will categorize you as Spanish taxpayer. I mean, if you are a Spanish citizen and you try to pull this trick, it may work as long as you never try to transfer the money you saved in the Cayman Islands to any Spanish bank account (any normal bank account, actually).

petre 5y ago

I keep seeing news titles about football playes like Cristiano Ronaldo and celebrities like Shakira getting slapped with back taxes and suspended jail sentences in Spain. A complex tax system and unclear rules are just another opportunity for abuse by tax authorities. https://m.timesofindia.com/sports/football/top-stories/messi-contract-highlights-tax-burden-for-players-in-spain/amp_articleshow/80654335.cms https://m.timesofindia.com/sports/football/top-stories/messi...

thefounder 5y ago
The abuse is both ways...see how much tax Amazon and Apple is paying. Hint: not much!
- CodesInChaos 5y ago
  They are paying VAT (revenue tax), but avoid corporate tax (profit tax).
  - Y_Y 5y ago
    At least in Spain a company will usually be able to avoid VAT on purchases they make. It is true that they charge and collect VAT on their sales to consumers. The majority off tax paid by these companies is on what they pay their employees.
    - tluyben2 5y ago
      This is very hard in reality though especially on goods from abroad; your NIE has to be on the invoice officially (which companies like BA do not do for you and I flew with them a lot for business) and while this is not strictly enforced, I got slapped many times on valid business purchases. The gestor told me to just deduct 75% of the deductible vat to not get onto the radar. Ugh.
      - Y_Y 5y ago
        This is too real. The ultimate tax is on your time, especially as a foreigner.
  - thefounder 5y ago
    VAT is not the only tax to be paid in the EU. Not to mention they pay less VAT than the local businesses through various schemes(i.e registering the company that makes the sale in a country with lower VAT)
    - CodesInChaos 5y ago
      > i.e registering the company that makes the sale in a country with lower VAT Do they? The Amazon invoices I receive have German VAT.
    - petre 5y ago
      That doesn't work anymore and it only worked for small volumes, not bigger retailers. They previously needed a VAT number from the state the custumer was in, which was very cumbersome. Now they just add the destination state's VAT on the invoice and I think the VAT is settled between states.
  - 988747 5y ago
    VAT is not a revenue tax. VAT is the tax paid by consumers not by the company. Company only acts as tax collector. The weird thing is this: they collect VAT on everyting they sell, but then, for everything they buy (raw materials, office supplies, etc.) they can substract amount of VAT paid for those from the amount of VAT collected. So purchases by companies are basically VAT-free. And of course some tax optimisation schemes come into play here, with some companies getting ahead on VAT (like, actually getting a VAT refund from the government, instead of paying it).
notahacker 5y ago
What makes you think the tax authorities were the ones being abusive, and not the very expensive tax specialists hired on behalf of a class of people moaning that it's not fair that people earning €100m a year don't pay smaller proportions of their income in taxes than people earning €100k?
- notahacker 5y ago
  All these downvotes, and not one person prepared to explain why portions of a Spain-based footballer's earnings from Spanish companies accruing to Belize based companies is the tax authorities being abusive... Or why the tax authority would prefer a situation where the tax code is sufficiently complex the Messis and their financial advisers think such an evasion scheme is worth trying to one where they just receive a percentage of his very large earnings without any fuss or court case, like your average employee of a Spanish company. The reality is the reverse: people with a lot of income to disguise and creative tax planners love finding ambiguities and imaginative interpretations of deductions and exemptions designed for other purposes, and tax authorities would rather not be chasing them through the courts years later.
Y_Y 5y ago
It's worth noting that there is special provision for these kinds of cases: https://en.wikipedia.org/wiki/Beckham_law https://en.wikipedia.org/wiki/Beckham_law Of course this doesn't protect you from outright tax evasion. Also there are some rules like the calculation of capital gains that differ from the US system, meaning that you are not necessarily protected from double taxation, since each system taxes a different transaction.
- tluyben2 5y ago
  The NHR in Portugal allows this for everyone (not wealthy per se).
  - bwb 5y ago
    Anyone moving to Portugal under NHR is by definition wealthy :)
    - tluyben2 5y ago
      How so? It is attractive for more reasons than paying less tax for wealth. I know quite a lot of wfh devs who moved in the past year.
      - bwb 5y ago
        ya those people are all wealthy :)
        tluyben2 5y ago
        I guess our definition of wealthy is different. There are bucketloads of 'nomads' under the NHR that have no wealth and just get money from outside PT: I am talking a few 1000 per month. What is wealth for you? The Beckham law wealth is what I would call wealth and sure there are people using nhr to move their wealth from some fund to their person within the 10 years without paying tax. However, unlike the Beckham law, for the NHR you do not need capital to benefit.

dnh44 5y ago

I too thought of moving my business to Spain until I started speaking to friends and acquaintances that had businesses in Spain. Lots of horror stories.

david-gpu 5y ago
Can you give us a brief idea of what they said?
- insta_anon 5y ago
  I’d also be very interested in learning more.
- tluyben2 5y ago
  Not the parent but from my own experience having had companies in many countries: Spain was by far the hardest and most confusing. I only had companies (4) in Andalusia, so I cannot comment on other regions; where other countries are quite logical and I am usually able to reason with the tax auditors, in Spain it was hostile and most accountants, lawyers and gestors basically told us, time and time again, to just relax and do many illegal things as you will lose boatloads of money I'd you do not. However, I like sleeping at night as do my partners so with did everything by the book and it was extremely painful to do so. There are rules on rules on rules, deducting business costs are hard if not impossible etc. And you need help for everything: in Spain there is an industry called Gestors who are not accountants but people who help navigate the bureacracy. The Spanish use them as well and there are many all over the place. So you pretty quickly find out things work if you are a tiny company (autonomo) and just don't declare any tax (put it in your matress), hire people by paying them cash etc. Or you need to be a large corp with lawyers, accountants etc to navigate things efficiently. In between you mostly just get misery. I sold and closed the companies and the people that bought them since then burnt out and quit or just adopted what my Spanish friends call 'the Spanish way', which is, quite simply basically running almost fully illegally: having a 'broken' PoS all the time (so people have to pay cash), using black funds to pay people and goods and just showing losses all the time (paying only the autonomo social security and nothing more). I would find it impossible to sleep as I simply cannot accept the thought of the Guardia stomping down the door in a few years. My friends tell me I worry too much about nothing... maybe; I would never do it again. Good to know is that Spanish taxes can go back 4 tax years which equates to about 5 years. This is shorter than most countries I did business in.

ucha 5y ago

"Taxpayers liable to PIT: Individuals of Spanish nationality who accredit their new fiscal residence in a country or territory labelled as a tax haven will not lose their status as taxpayers for Individual Income Tax. This rule is of application during the tax period in which the change of residence occurs and for the next four tax periods." https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/SPAIN-Tax-Residency.pdf https://www.oecd.org/tax/automatic-exchange/crs-implementati...

tluyben2 5y ago
Ah ok, that is very particular: tax havens and Spanish nationality. But thanks, I did not know that. And luckily neither applies to me!
- ucha 5y ago
  It's even more particular, but in practice, it does affect a lot of funds, if not a lot of people - which is why they legislated. One can move to a no/low tax jurisdiction and not be a Spanish tax resident as long as they're covered by a double taxation agreement.
tomp 5y ago
Does this rule actually make sense? So instead of moving from Spain to e.g. Cayman Islands, you move from Spain to the UK, become UK taxpayer (in something like 180 days), cease being Spanish taxpayer, then move from the UK to Cayman Islands. Saves 4 years! This is just another example of braindead legislation created by people who are unable to consider the full spectrum of the consequences of the law (beyond just the "intended" effects) and/or their primary motivation is publicity ("look at all these great laws I passed!")
- tkiolp4 5y ago
  In your example, the moment you move from UK to Cayman Islands, the Spanish government/tax system will know (unless you make sure you hide it... but this is another topic). At some point you won’t be a UK taxpayer, in that moment the Spanish government/tax system will categorize you as Spanish taxpayer. I mean, if you are a Spanish citizen and you try to pull this trick, it may work as long as you never try to transfer the money you saved in the Cayman Islands to any Spanish bank account (any normal bank account, actually).