Tax return - foreign income
Thread poster: clairemcn

clairemcn
United Kingdom
Local time: 15:43
French to English
+ ...
Sep 8, 2013

Hi everyone,

I know this is a long shot...

I'm filling in my tax return and I need to declare some income I earned in Spain (I lived there for a short time this year). From looking at my payslips, it appears that for some reason I paid hardly any tax....only about 20 euros a month for 5 months. I was wondering if anyone who has worked in Spain had any idea of how this could be? I thought the tax was supposed to be about 25% there, even for low earners. I suppose it could be that I didn't earn enough to start getting taxed (i.e. was still under the 'personal allowance' amount). If this were the case, would I still get credit here in the UK or would they expect me to pay the difference between the tax I paid in Spain and the tax I'd have paid if I earned that money here?


 

Charlotte Farrell  Identity Verified
United Kingdom
Local time: 15:43
Member (2013)
German to English
+ ...
Call HMRC Sep 8, 2013

They're one of the only companies/authorities I ever call without wanting to pull my hair out, and they'll be able to answer your question better than anyone else. Maybe don't give precise amounts but ask what you should do with foreign income and tax you've already paid on it abroad.

 

Marie-Helene Dubois  Identity Verified
Spain
Local time: 16:43
Member (2011)
Spanish to English
+ ...
Employee? Sep 9, 2013

Hi Claire,

You don't mention whether you were an employee or working freelance although you do mention payslips, which leads me to believe you were actually employed in Spain.

You also don't mention how long you were there, which will be important in order to know where you were a tax resident at the time. Were you employed in Spain for more or less than half a year?

Also, you don't mention whether you actually did a "declaración de la renta" (tax return) in Spain. This would give you the true view of the tax you paid/were exposed to. Amounts appearing on payslips do not accurately reflect the tax you've been exposed to because this could be adjusted up or down once you file your tax returns.

You are quite right in thinking that there is a threshold as well though and if you come under that threshold you are not obliged to file a tax return. I'm not sure what that threshold is now but you can easily find this out.

You'll probably find out what you want to find out about your exposure to UK tax on your Spanish earnings from HMRC.

The way I understand a dual taxation treaty is that if you worked in one country while being a tax resident in another, any tax you paid in the first will be deducted from your tax obligations in the second so that you only have to pay the remainder, rather than the applicable taxes in both.
However, if you have paid more taxes in the first country than you would have been exposed to in your country of tax residence, you don't get the difference back.


 

clairemcn
United Kingdom
Local time: 15:43
French to English
+ ...
TOPIC STARTER
Tax confusion Sep 9, 2013

Thanks for the replies.

Marie-Helene, I was an employee there. I was there for just 2-3 months in 2 separate tax years, which means I was still tax resident in the UK.

I didn't do a Spanish tax return because I apparently wasn't required to. I only earned about £3000 the whole time I was employed there.

I've already talked to HMRC on the phone and they explained about paying the difference in tax, which made perfect sense. My issue now is that I seem to have paid very, very little and I'm wondering if that means I have to make it all up here in the UK, given that I exceeded my personal allowance with my PAYE job last year. That seems very unfair given that I was barely even earning a 'living wage' in Spain (I was on about 650 euros a month)...


 

Tom in London
United Kingdom
Local time: 15:43
Member (2008)
Italian to English
Foreign tax Sep 9, 2013

clairemcn wrote:

Hi everyone,

I know this is a long shot...

I'm filling in my tax return and I need to declare some income I earned in Spain (I lived there for a short time this year). From looking at my payslips, it appears that for some reason I paid hardly any tax....only about 20 euros a month for 5 months. I was wondering if anyone who has worked in Spain had any idea of how this could be? I thought the tax was supposed to be about 25% there, even for low earners. I suppose it could be that I didn't earn enough to start getting taxed (i.e. was still under the 'personal allowance' amount). If this were the case, would I still get credit here in the UK or would they expect me to pay the difference between the tax I paid in Spain and the tax I'd have paid if I earned that money here?


The UK has agreements with many countries (of which I believe Spain is one) under which you must declare, to HMRC, all the income you have earned in those countries. To declare it you must complete the "Foreign" pages of your Self-Assessment tax return.

The "Foreign" pages ask you to state the amount you received (a) before it was taxed in the other country and (b) after it was taxed in the other country (all these amounts must of course be given in GBP). Under the reciprocal agreement, the tax you already paid in the other country is taken into account in calculating the overall tax you need to pay on your whole income for that year.

However there are ins and outs to this and I would strongly suggest that you consult a UK accountant.

You may also find it useful to download the "Foreign" pages from the HMRC website, along with the Help pages, and read through them.

[Edited at 2013-09-09 09:06 GMT]


 

clairemcn
United Kingdom
Local time: 15:43
French to English
+ ...
TOPIC STARTER
Double Taxation Sep 9, 2013

Tom in London wrote:

clairemcn wrote:

Hi everyone,

I know this is a long shot...

I'm filling in my tax return and I need to declare some income I earned in Spain (I lived there for a short time this year). From looking at my payslips, it appears that for some reason I paid hardly any tax....only about 20 euros a month for 5 months. I was wondering if anyone who has worked in Spain had any idea of how this could be? I thought the tax was supposed to be about 25% there, even for low earners. I suppose it could be that I didn't earn enough to start getting taxed (i.e. was still under the 'personal allowance' amount). If this were the case, would I still get credit here in the UK or would they expect me to pay the difference between the tax I paid in Spain and the tax I'd have paid if I earned that money here?


The UK has agreements with many countries (of which I believe Spain is one) under which you must declare, to HMRC, all the income you have earned in those countries. To declare it you must complete the "Foreign" pages of your Self-Assessment tax return.

The "Foreign" pages ask you to state the amount you received (a) before it was taxed in the other country and (b) after it was taxed in the other country (all these amounts must of course be given in GBP). Under the reciprocal agreement, the tax you already paid in the other country is taken into account in calculating the overall tax you need to pay on your whole income for that year.

However there are ins and outs to this and I would strongly suggest that you consult a UK accountant.


I know that part. My concern is that I paid little to no tax in Spain (having googled, it seems I was way under the personal allowance), so I'm now concerned about having to make up the difference here, given that the £3000 or so I earned in Spain sends me over the personal allowance in the UK.

I'll contact you about the accountant!


 

Marie-Helene Dubois  Identity Verified
Spain
Local time: 16:43
Member (2011)
Spanish to English
+ ...
I think that Sep 9, 2013

if you continued to be tax resident in the UK, your Spanish income will not be differentiated from your UK income by the tax authorities in the UK. Even though it will show as foreign income, it will still be considered income taxable in the UK.

I think you're right about not having exceeded the personal allowance in Spain though. I've had a quick check on the IRPF site and it looks as though it is either in the region of €11k or €22k depending on circumstances.


 

Tom in London
United Kingdom
Local time: 15:43
Member (2008)
Italian to English
Foreign,.... Sep 9, 2013

Marie-Helene Dubois wrote:

Even though it will show as foreign income....



And all foreign income has to be declared as such by setting it out separately on the "Foreign" pages of the Tax Return. If these have not been sent to you, you can download them from the HMRC website.


 


There is no moderator assigned specifically to this forum.
To report site rules violations or get help, please contact site staff »


Tax return - foreign income

Advanced search






Protemos translation business management system
Create your account in minutes, and start working! 3-month trial for agencies, and free for freelancers!

The system lets you keep client/vendor database, with contacts and rates, manage projects and assign jobs to vendors, issue invoices, track payments, store and manage project files, generate business reports on turnover profit per client/manager etc.

More info »
CafeTran Espresso
You've never met a CAT tool this clever!

Translate faster & easier, using a sophisticated CAT tool built by a translator / developer. Accept jobs from clients who use SDL Trados, MemoQ, Wordfast & major CAT tools. Download and start using CafeTran Espresso -- for free

More info »



Forums
  • All of ProZ.com
  • Term search
  • Jobs
  • Forums
  • Multiple search