Claiming back withholding tax deducted in Spain
Thread poster: Hazel Underwood

Hazel Underwood  Identity Verified
United Kingdom
Local time: 19:18
Member (2005)
German to English
+ ...
Sep 21

Has anyone had experience of claiming back withholding tax that was deducted by a client in Spain? This was for a payment they made in the period prior to me sending a certificate of fiscal residence.

My client has issued me with a certificate showing the amount deducted which they say I can submit to my tax office in the UK to request a refund.

But to me that doesn't seem likely so I thought I'd ask here first in case anyone had ever done this!

Thanks,

Hazel


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Sheila Wilson  Identity Verified
Spain
Local time: 19:18
Member (2007)
English
+ ...
Do you have an accountant? Sep 22

They had absolutely no right to deduct tax from you. I don't know what the Spanish tax authorities are going to do with the money as you don't have a Spanish tax reference, so they'll have nothing to record it against. I'd demand the money back from the agency in Spain, personally. You presented an invoice and they've paid you15% (probably) too little. I imagine you didn't deduct the IRPF from the invoice total, so they're legally obliged to pay the full amount. But an accountant who's fully conversant with cross-border business should advise you. Beware though that not all accountants are up to speed in EU taxation.

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Ana Cuesta  Identity Verified
Spain
Local time: 20:18
Member
English to Spanish
Not so easy but there should be a solution... Sep 22

Sheila Wilson wrote:

They had absolutely no right to deduct tax from you. I don't know what the Spanish tax authorities are going to do with the money as you don't have a Spanish tax reference, so they'll have nothing to record it against. I'd demand the money back from the agency in Spain, personally. You presented an invoice and they've paid you15% (probably) too little. I imagine you didn't deduct the IRPF from the invoice total, so they're legally obliged to pay the full amount. But an accountant who's fully conversant with cross-border business should advise you. Beware though that not all accountants are up to speed in EU taxation.


They are actually obliged to deduct tax (21% if I am not mistaken), short of the provider offering proof of residing abroad, or they would run into trouble with the Spanish tax authorities (Hacienda). But the UK and Spain have agreements to avoid double taxation so there surely will be a way for Hazel to recover that amount. Why not phoning the Inland Revenue about it? (I've heard they are far more helpful with that sort of thing than our Hacienda).

[Edited at 2017-09-22 08:32 GMT]

Just editing to add that, with online-rendered services, an invoice issued from a foreign address and payment made into a foreign bank account MIGHT be considered proof enough, I don't know about that... I mean, maybe the client was overly cautious, my initial point was that they weren't being dishonest or doing anything illegal but quite the opposite.

[Edited at 2017-09-22 08:43 GMT]


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Tom in London
United Kingdom
Local time: 19:18
Member (2008)
Italian to English
Outrageous Sep 22

Sheila Wilson wrote:

They had absolutely no right to deduct tax from you. I don't know what the Spanish tax authorities are going to do with the money as you don't have a Spanish tax reference, so they'll have nothing to record it against. ....



I agree with Sheila. No country has the right to deduct any tax from the income of people who are not resident in that country.

Assuming that you are resident exclusively in the UK for tax purposes, then no other country has jurisdiction over your financial affairs.

What to do?

Since the client has issued "a certificate showing the amount deducted which they say I can submit to my tax office in the UK to request a refund", my suggestion would be to ask HMRC, who are usually very helpful.

[Edited at 2017-09-22 09:03 GMT]


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Hazel Underwood  Identity Verified
United Kingdom
Local time: 19:18
Member (2005)
German to English
+ ...
TOPIC STARTER
HMRC no help Sep 22

Have phoned HMRC and was informed that there is no way to claim this back in the UK. The only option I have would be to try to reclaim it from the Spanish tax authorities. I'm hoping my client will help with this!

Ana Cuesta wrote:

Sheila Wilson wrote:

They had absolutely no right to deduct tax from you. I don't know what the Spanish tax authorities are going to do with the money as you don't have a Spanish tax reference, so they'll have nothing to record it against. I'd demand the money back from the agency in Spain, personally. You presented an invoice and they've paid you15% (probably) too little. I imagine you didn't deduct the IRPF from the invoice total, so they're legally obliged to pay the full amount. But an accountant who's fully conversant with cross-border business should advise you. Beware though that not all accountants are up to speed in EU taxation.


They are actually obliged to deduct tax (21% if I am not mistaken), short of the provider offering proof of residing abroad, or they would run into trouble with the Spanish tax authorities (Hacienda). But the UK and Spain have agreements to avoid double taxation so there surely will be a way for Hazel to recover that amount. Why not phoning the Inland Revenue about it? (I've heard they are far more helpful with that sort of thing than our Hacienda).

[Edited at 2017-09-22 08:32 GMT]

Just editing to add that, with online-rendered services, an invoice issued from a foreign address and payment made into a foreign bank account MIGHT be considered proof enough, I don't know about that... I mean, maybe the client was overly cautious, my initial point was that they weren't being dishonest or doing anything illegal but quite the opposite.

[Edited at 2017-09-22 08:43 GMT]


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Tom in London
United Kingdom
Local time: 19:18
Member (2008)
Italian to English
Ask in Spanish Sep 22

Hazel Underwood wrote:

Have phoned HMRC and was informed that there is no way to claim this back in the UK. The only option I have would be to try to reclaim it from the Spanish tax authorities. I'm hoping my client will help with this!


Oh well, at least that possibility has been eliminated.

Next suggestion: post your query in the Spanish forums (in Spanish). I'm sure someone there will be able to help.


[Edited at 2017-09-22 10:38 GMT]


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Hazel Underwood  Identity Verified
United Kingdom
Local time: 19:18
Member (2005)
German to English
+ ...
TOPIC STARTER
I don't know any Spanish :o( Sep 22

Thanks for the suggestion, but sadly I don't speak Spanish!

Tom in London wrote:

Hazel Underwood wrote:

Have phoned HMRC and was informed that there is no way to claim this back in the UK. The only option I have would be to try to reclaim it from the Spanish tax authorities. I'm hoping my client will help with this!


Oh well, at least that possibility has been eliminated.

Next suggestion: post your query in the Spanish forums (in Spanish). I'm sure someone there will be able to help.


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Tom in London
United Kingdom
Local time: 19:18
Member (2008)
Italian to English
Legal/illegal Sep 22

Hazel Underwood wrote:

Thanks for the suggestion, but sadly I don't speak Spanish!



The fact that you have provided evidence that you are not a taxpayer in Spain now puts the onus on your client to reimburse you. What they have done is in fact illegal (and you may wish to advise them of that).


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Sheila Wilson  Identity Verified
Spain
Local time: 19:18
Member (2007)
English
+ ...
False information, I'm afraid Sep 22

Ana Cuesta wrote:
They are actually obliged to deduct tax (21% if I am not mistaken), short of the provider offering proof of residing abroad, or they would run into trouble with the Spanish tax authorities (Hacienda).

Most agencies know that isn't true, and all of them ought to know it. All they're obliged to do is to collect tax from all suppliers who are fiscally resident in Spain. So they just need to be satisfied, themselves, that the supplier is not a Spanish taxpayer.

Just editing to add that, with online-rendered services, an invoice issued from a foreign address and payment made into a foreign bank account MIGHT be considered proof enough

Where it's paid into has absolutely no bearing on it (I personally have bank accounts in three countries and I use them all for clients' payments, perfectly legally). But you're right when you say that a legally issued invoice issued from a foreign address is proof enough, as that address legally has to be the tax-payer's registered address. Of course, it's easy if the supplier is registered for VAT as they then appear on an EU-wide database, but not all UK freelancers are registered - which is something that Spanish agencies often refuse to understand/take into account. But if a supplier's entire online presence supports the fact that they live and work in the UK, that should prove adequate due diligence on the agency's part.

But the UK and Spain have agreements to avoid double taxation so there surely will be a way for Hazel to recover that amount.

Double taxation agreements are for cases where income is potentially taxable in two places, to avoid paying tax on the same income in both countries. That would apply, for example, to an employee of a UK-based company on secondment to a company based in Spain. In a B2B transaction, there is no question of any tax liability in the client's country (unless it's a local client, of course ), so any double taxation treaty is irrelevant.

Hazel Underwood wrote:
I don't speak Spanish!

It would still be an idea to post on the Spanish forum. I posted in English (with an apology, of course) before I had enough Spanish to attempt garbled posts in the proper forum language. They didn't bite my head off, and were actually extremely helpful .


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Ana Cuesta  Identity Verified
Spain
Local time: 20:18
Member
English to Spanish
I can post it in Spanish for you, with your permission Sep 22

Hazel Underwood wrote:

Thanks for the suggestion, but sadly I don't speak Spanish!

Tom in London wrote:

Hazel Underwood wrote:

Have phoned HMRC and was informed that there is no way to claim this back in the UK. The only option I have would be to try to reclaim it from the Spanish tax authorities. I'm hoping my client will help with this!


Oh well, at least that possibility has been eliminated.

Next suggestion: post your query in the Spanish forums (in Spanish). I'm sure someone there will be able to help.



Sorry to hear that... As for the Spanish forums, I can post a query in Spanish in your behalf and direct people here or back-translate the answers they provide there for you, if you give me your permission to do so...


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Hazel Underwood  Identity Verified
United Kingdom
Local time: 19:18
Member (2005)
German to English
+ ...
TOPIC STARTER
Yes please Ana, any help would be most appreciated! Sep 22

Ana Cuesta wrote:

Hazel Underwood wrote:

Thanks for the suggestion, but sadly I don't speak Spanish!

Tom in London wrote:

Hazel Underwood wrote:

Have phoned HMRC and was informed that there is no way to claim this back in the UK. The only option I have would be to try to reclaim it from the Spanish tax authorities. I'm hoping my client will help with this!


Oh well, at least that possibility has been eliminated.

Next suggestion: post your query in the Spanish forums (in Spanish). I'm sure someone there will be able to help.



Sorry to hear that... As for the Spanish forums, I can post a query in Spanish in your behalf and direct people here or back-translate the answers they provide there for you, if you give me your permission to do so...


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Ana Cuesta  Identity Verified
Spain
Local time: 20:18
Member
English to Spanish
Posted in the Spanish forum Sep 22

Hazel Underwood wrote:

Ana Cuesta wrote:

Hazel Underwood wrote:

Thanks for the suggestion, but sadly I don't speak Spanish!

Tom in London wrote:

Hazel Underwood wrote:

Have phoned HMRC and was informed that there is no way to claim this back in the UK. The only option I have would be to try to reclaim it from the Spanish tax authorities. I'm hoping my client will help with this!


Oh well, at least that possibility has been eliminated.

Next suggestion: post your query in the Spanish forums (in Spanish). I'm sure someone there will be able to help.



Sorry to hear that... As for the Spanish forums, I can post a query in Spanish in your behalf and direct people here or back-translate the answers they provide there for you, if you give me your permission to do so...



https://www.proz.com/forum/translation_in_spain_la_traducción_en_españa/318875-retención_de_irpf_errónea_de_una_agencia_española_a_un_traductor_extranjero.html


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clairemcn
United Kingdom
Local time: 19:18
Member (2013)
French to English
+ ...
Completely unacceptable Sep 23

They have no right whatsoever to deduct tax from you. I work with Spanish agencies/clients all the time and have never had this happen. As others have pointed out, you're not registered as a taxpayer in Spain, so how could they possibly deduct tax without having the relevant tax information for you? As I see it, the mistake they made is their problem, not yours. I would politely ask them to pay my invoice in full.

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mariealpilles  Identity Verified
France
Local time: 20:18
Member (2014)
English to French
+ ...
Tax deducted in Spain Sep 24

They should never have deducted it in the first place since you are not liable for tax payments not residing in Spain. You have to claim it back from the Spanish agency. I have had similar issues and have always argued beforehand, so it never actually happened. I must admit, however, that I am sick and tired of them making life difficult for the translator, so now I avoid working for Spanish agencies because of that, because they are bad payers, because their rates are low and also because it seems that paperwork is more important to them than anything else.

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Ana Cuesta  Identity Verified
Spain
Local time: 20:18
Member
English to Spanish
An answer in the Spanish forum Sep 25

David Gómez says in the Spanish forum that the mistake was on the side of the agency and it should be them who take the trouble of claiming from the AEAT (the Spanish tax authorities) the money they deducted incorrectly. He says he had a similar issue with an agency in Japan and the agency finally paid him in full.

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