IRPF for british resident
Thread poster: Leesha

Leesha
United Kingdom
Mar 16, 2015

Hello proz user,

I have done a months work for a spanish company as freelance translator. They wanted me to issue them an invoice for my monthly payment. After receiving the invoice they then told me that I have to pay 24% IRPF, which I can claim back from the spanish government once a year.

Now this is totally unacceptable for me, but sadly I know nothing about IRPF. I thought I only had to pay this if I am a Spanish resident? Do I really have to pay money to the spanish government? I have nothing to do with the spanish government, but I can imagine the hassle I will have to go through to get this money back. I do not own any spanish tax number either.

Can anyone help me please?


 

Sheila Wilson  Identity Verified
Spain
Local time: 18:37
Member (2007)
English
+ ...
Weird! Mar 16, 2015

Leesha wrote:
I have done a months work for a spanish company as freelance translator. They wanted me to issue them an invoice for my monthly payment. After receiving the invoice they then told me that I have to pay 24% IRPF, which I can claim back from the spanish government once a year.

I can only imagine they've never outsourced outside Spain before. It certainly only applies to Spanish-registered self-employed and companies.


 

Tom in London
United Kingdom
Local time: 18:37
Member (2008)
Italian to English
UK Mar 16, 2015

Leesha wrote:

Hello proz user,

I have done a months work for a spanish company as freelance translator. They wanted me to issue them an invoice for my monthly payment. After receiving the invoice they then told me that I have to pay 24% IRPF, which I can claim back from the spanish government once a year.

Now this is totally unacceptable for me, but sadly I know nothing about IRPF. I thought I only had to pay this if I am a Spanish resident? Do I really have to pay money to the spanish government? I have nothing to do with the spanish government, but I can imagine the hassle I will have to go through to get this money back. I do not own any spanish tax number either.

Can anyone help me please?


Assuming that for tax purposes you are resident in the UK only, then the only laws and regulations with which you should comply are those of HMRC in the UK. You should not attempt to comply with the tax law of any other country, as this would be illegal. You are not liable for any tax in any country other than the UK, including Spain. Your Spanish client must pay your invoice in full.

[Edited at 2015-03-16 17:05 GMT]


 

Leesha
United Kingdom
TOPIC STARTER
Thank you Mar 16, 2015

Thank you very very much for the fast answers, you helped me a lot. I will not pay the 24% and request full payment for my work. I was very suspicious as I am already paying my tax here in the UK

 

Niina Lahokoski  Identity Verified
Finland
Local time: 20:37
Member (2008)
English to Finnish
+ ...
You need a Certificate of Fiscal Residence Mar 16, 2015

To avoid this with a Spanish client, I had to send a "certificate of fiscal residence" to them.
You can read more in this topic. It's a bit old, but might help anyway.

[Edited at 2015-03-16 17:14 GMT]


 

Tom in London
United Kingdom
Local time: 18:37
Member (2008)
Italian to English
What I do Mar 16, 2015

Niina Lahokoski wrote:

To avoid this with a Spanish client, I had to send a "certificate of fiscal residence" to them.
You can read more in this topic. It's a bit old, but might help anyway.

[Edited at 2015-03-16 17:14 GMT]


In cases like this I simply add, in the heading of my invoice (in English of course, since my tax authority is HMRC)

Tax Resident in the UK
UK Tax Code XXXXXXXXX

This seems to keep people happy.

[Edited at 2015-03-16 17:45 GMT]


 

Leesha
United Kingdom
TOPIC STARTER
News Mar 24, 2015

The company said they were gonna ask their accountant and got back to me with this:

'Because our company is based in Spain you need to adjust your billing. That means you have to deduct the 24% IPRF but you can claim it back from the tax office in the UK as there is an agreement on both sides'

Does anyone know anything about this agreement? Am I really gonna be able to claim back the money from the UK tax office? The amount is near £1000 so it would be crucial to not get the 24% back.

Thank you.


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Be careful with that Mar 24, 2015

Leesha wrote:

The company said they were gonna ask their accountant and got back to me with this:

'Because our company is based in Spain you need to adjust your billing. That means you have to deduct the 24% IPRF but you can claim it back from the tax office in the UK as there is an agreement on both sides'


Double taxation conventions stipulate which type of income can be taxed by which country, or which country has the first right to tax it, meaning the other country may tax it too. In the latter case, tax paid in the country that has the first right to tax the income is recovered from the tax paid in the second country. There is more than one way of calculating the credit, but a common method is matching credit where the amount is simply deducted from any tax due. That sounds fair enough.

But according to most such treaties, Spain would have no right to tax this revenue. Only the UK would. You would therefore have to study very carefully if the treaty also says that tax paid in Spain which was NOT due under the treaty can also be deducted in the UK. I've read many of these treaties, but I'd have to read this specific one to decrypt if this is possible.

Even if you have studied the Convention and found that you can deduct the Spanish tax in the UK, will HMRC accept to do it, or will you then have to take a fight with them? I could well imagine that the HMRC wouldn't be overly joyful by Spain stealing tax revenue from the UK in this way, because that's what they indirectly do, effectively violating the double tax convention with the UK. That could easily be much more cumbersome than obtaining that certificate of fiscal residence in the first place.

Also, you will not get money back in the UK in the case where the Spanish tax is higher then the income tax due in the UK.

If the job is worth it to go through some red tape, I would in your case decide now if I want to go to the trouble of getting the fiscal certificate to get the job or not. If not, I would dump the whole thing and not risk an even bigger fight with HMRC later.


 

Denise Phelps  Identity Verified
Local time: 19:37
Spanish to English
+ ...
non-resident tax Mar 24, 2015

It seems to me that they're trying to apply the tax rate for non-residents, which is not intended for people who are NEVER resident, but for people who are resident for less than 183 days a year and earn income in Spain. Furthermore, non-resident IRPF is 19% for residents of other EU countries, not 24%. Your clients don't appear to know what they're doing. I would be very careful before allowing them to deduct anything.

There are a couple of FAQs on this page that might help you a little: http://www.strongabogados.com/taxes.php#proof


 

Sheila Wilson  Identity Verified
Spain
Local time: 18:37
Member (2007)
English
+ ...
The thing is Mar 24, 2015

Denise Phelps wrote:
It seems to me that they're trying to apply the tax rate for non-residents, which is not intended for people who are NEVER resident, but for people who are resident for less than 183 days a year and earn income in Spain. Furthermore, non-resident IRPF is 19% for residents of other EU countries, not 24%. Your clients don't appear to know what they're doing. I would be very careful before allowing them to deduct anything.

I've highlighted the point that I think the client has misunderstood (or rather, one of themicon_smile.gif). If you're resident in the UK and running a freelance business there (i.e. paying taxes and NI contributions as a self-employed person), you simply aren't earning income in Spain. You're invoicing a client in Spain - but the tax point for this income is the UK because that's the registered address of your business (and it's hopefully on the invoice).

They seem to be thinking that you're a temporary, part-time employee of theirs. Wouldn't be the first agency to think that, would they?icon_frown.gif As they're clearly incompetent, I'd certainly agree with Denise - demand payment of the full amount. Let the Spanish government sue youicon_wink.gif.


 


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IRPF for british resident

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