Is now the time to move your business to Spain from the UK?

EU ruling

With little more than a month to go before the UK leaves the EU definitively, many business owners are asking themselves if now is the time to make the professional move to Spain. In this article, we help you answer that question with information about what moving your business to Spain from the UK entails.

Will I Be Able to Be Resident in Spain?

All foreign business owners have the opportunity to become resident in Spain, and this will not change after 1 January 2021. However, if you move your business to Spain from the UK before the end of this year, you will be eligible for residency under the rules of the Withdrawal Agreement. This basically means that you will be considered an EU resident in Spain and have identical rights to those enjoyed by other EU citizens in the country.

What If I Don’t Become Resident This Year?

If for practical reasons it is not possible to take out Spanish residency before 31 December this year, there will be other options open to you.

At the time of writing (mid-November), Spain and the UK had yet to reach a definitive agreement on the status of UK nationals in Spain and vice versa. However, all foreigners are eligible for residency in Spain, providing they meet certain conditions.

Read our comprehensive guide to about residency and nationality options in Spain.

What Are The Other Residency Options?

You have the option to obtain an Entrepreneur or Investor Visa. To do so, you must meet one of the following requirements:

  • Invest at least €2 million in Spanish government bonds
  • Purchase at least €1 million in shares of Spanish companies or bank deposits at Spanish financial institutions.
  • Buy real estate in Spain to the value of at least  €500,000 (value per visa applicant). This option is commonly known as the Golden Visa.
  • Start a business project that will be developed in Spain and is considered of general interest.

‘General interest’ is measured by the performance of at least one of the following conditions: 

1. Creating jobs. 

2. Making an investment with relevant socio-economic impact in the geographical area in which the activity will take place. 

3. Making a significant contribution to scientific innovation and/or technology.

There must also be a substantial capital investment made by a company that is established in a territory not considered a tax haven by Spanish law. The applicant must own, directly or indirectly, the majority of the voting rights and have the power to appoint or remove a majority of the company board members.

Find out more about setting up a company in Spain.

Any Other Options?

Another way to set up a business in Spain is to create a Spanish International Investment Company (known as an Entidad de Tenencia de Valores Extranjeros). The entity offers an advantageous regime for companies that want to use Spain as an investment platform abroad. Its main benefit lies in tax exemption with respect to dividends and capital gains obtained from holding shares in foreign companies.

Can I Pay Lower Taxes?

If you become a resident in Spain, you are generally liable to the same tax rates as all other residents. However, there is an exception to this.

Known as the Beckham Law, this a special tax regime applies to foreigners who choose to be liable for Spanish non-resident income tax laws even if they have an employment placement in Spain and are therefore tax residents in Spain.

To become a non-tax resident as per the Beckham Law, you must fulfil the following requirements:

  • You must not have been tax resident in Spain for 10 tax periods (10 calendar years) prior to your employment placement.
  • The placement in Spain is the result of an employment contract (or letter of assignment) or the result of becoming the administrator of a company. (Note that conditions apply to this aspect of the law.)
  • Income may not be earned through a permanent establishment located in Spanish territory.

What are the tax rates for the Beckham Law?

Income tax applied to employment is levied at 24% up to €600,000. Earnings in excess of this amount are taxed at 45%.

This represents a considerable saving on the progressive tax rates levied on Spanish residents (a maximum of 43% on worldwide income).

Is Running A Company In Spain Different To The UK?

In general terms, the two countries are very similar. However, as you would expect, there are some key differences. They include:

  • The initial minimum share capital for a company with limited liability is €3,000.
  • All companies must register for VAT.
  • There is no VAT-exempt threshold in Spain.
  • Employment regulations vary considerably from those in the UK.

What About Double-Tax Treaties Between Spain And The UK?

After Brexit, there will be a double-tax treaty in place between the two countries. This will benefit individuals who take up residency in Spain but continue to conduct business from the UK.

Take Advantage of our Expertise

If you decide to move your business to Spain from the UK, place yourself and your company in the hands of the experts. Our team at Costaluz Lawyers can save you time, stress and money by taking care of every aspect of the transfer from one country to another.

Get in touch for a free consultation and discover how we can help you make the successful business move.

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