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Most probably there is a treaty to avoid double taxation between both countries. The general rule is IMO (I'm not an accountant): You either are employed in th
by dmichulke 12y ago
Most probably there is a treaty to avoid double taxation between both countries.
The general rule is IMO (I'm not an accountant): You either are employed in the US and pay US taxes or you are a company or individual in Spain offering services to a US company, then you are taxed in Spain. The latter means you have no employment contract but a consulting contract.
I am European but I work also for American companies as consultant and as such I _have to_ pay taxes in my country of residence (Luxembourg).
The good thing in my case is you avoid VAT, the subjective thing (good or bad, depends on your perception) is that you are subject to the obligatory social security deductions ranging from 25% to 40% (in the countries I know).
Taxes must be paid as well if you pay social security but they shouldn't play the big role unless you earn big (>= 8k E per month)
Whether paying social security is good depends heavily on your country of residence and it is kind of up to you. I'd preferably not pay social security in Germany but in Luxembourg it's tolerable.
- Luc 12y ago> The general rule is IMO (I'm not an accountant): You can choose to be employed in the US and pay US taxes [...] I'm not an accountant either, but I'm pretty sure any European nation's tax office would take a dim view of this point of view. If you do the work in Spain, you'll need to be taxed in Spain, especially if you're not trying to fly under the radar.
- bulte-rs 12y agoPartially true, you will have to pay your income tax in Spain, except (cue european tax treaties) when your socio-economic life lies in a different country (e.g. you have a gym membership, cellphone and house in the Netherlands); and then again it depends on the treaty between the two countries. Disclaimer: I am not a tax lawyer, my wife is though. edit: added example
- dmichulke 12y agoI know a few people who live in France, Germany and Belgium but are (IMO fully) taxed in Luxembourg based on the fact that they work there. They are called Grenzgänger / frontaliers. http://www.diegrenzgaenger.lu/ http://www.diegrenzgaenger.lu/ http://www.lesfrontaliers.lu/ http://www.lesfrontaliers.lu/
- pbhjpbhj 12y agoOn a related note VATMOSS came in in January 2015 which means if you're selling to Europeans then you, the business/seller, have to account for VAT (ie sales tax) on "e-services" in the country of the purchaser. That's right if you sell online to people in any European country then by law you have to deal with every different tax system in Europe. [There are exceptions! It's on e-services not physical goods or training involving human interaction]. Oh, and FYI, under common market legislation you can't refuse to sell to any European country (if you're in Europe) so you can't choose to make e-sales only to your host country to avoid facing VATMOSS. Now there's a question of jurisdiction for USA companies - but I gather that under treaty obligations the law is relevant. VATMOSS is a scheme to handle the payments to the different tax offices. Just felt that if you're in the reverse situation of selling to Europe you'd want to factor this in.