Billing to Spain as a foreign resident freelancer - what are the tax rules?
Autor wątku: Ibex Alley
Ibex Alley
Australia
Local time: 04:04
Nowy użytkownik
hiszpański > angielski
Jul 17

I am a resident of Australia, but have a couple of clients in Spain. As I am not registered as a Spanish autónomo, I have been billing them using my Australian Business Number.

I'm trying to determine what income tax, if any, I should pay in Spain.

One of my clients is in the habit of charging me 15% IRPF, which seems to be a pretty standard income tax.

My other client is in the habit of charging me 24%, the Spanish non-resident tax. On the surface, this may seem correct, seeing as I'm a foreign resident. But all the information I've found about this tax online pertains to foreigners who receive an income from property and investments they own in Spain—hardly analogous to my situation.

(As regards VAT, I think I've determined that they can take care of that on their end, but am open to being set straight on this point.)

I'd be grateful for a helping hand, as these tax questions are doing my head in a little!


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Philippe Etienne  Identity Verified
Hiszpania
Local time: 20:34
Członek ProZ.com
angielski > francuski
Unhelpful reply Jul 17

Ibex Alley wrote:
...One of my clients is in the habit of charging me 15% IRPF, which seems to be a pretty standard income tax.

...My other client is in the habit of charging me 24%...

For god's sake, nobody should charge you any of their own income tax or other non-resident rubbish!
If you're a tax resident in Australia for your business, you pay your own income tax there and that's it.
No need to pay also your customers' tax!

These 15% have sthg to do with advance collection of income tax in domestic transactions only, and 24% is the income tax rate collected from non-resident individuals for interests, rents, etc. from investments in Spain.
None of which has anything to do with the matter at hand.

I recommend you get some serious information about how to sell services to foreign countries. A good starting point could be an appointment with a local accountant.

But basically, amounts on your invoices are what you receive as income, and the Ozzie tax administration taxes you based on YOUR income.
Your customers' tax is your customers' business.

Philippe


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Lieselotte Kleinhans  Identity Verified
Hiszpania
Local time: 20:34
Członek ProZ.com
od 2010

angielski > niemiecki
Philippe is right... Jul 17

"These 15% have sthg to do with advance collection of income tax in domestic transactions only, and 24% is the income tax rate collected from non-resident individuals for interests, rents, etc. from investments in Spain."
This only applies to domestic customers.

I also recommend you contact an accountant or maybe the Australian Institute of Interpreters and Translators (AUSIT). They will probably have information materials on billing and tax issues with regard to foreign customers.


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Thomas T. Frost  Identity Verified
Niemcy
Local time: 20:34
Członek ProZ.com
od 2014

francuski > duński
+ ...
Double tax agreements Jul 17

I have never seen a double tax agreement between two countries according to which freelance work isn't taxed exclusively in the country in which the work is carried out, i.e. Australia in your case.

You can find the agreements that exist between Australia and other countries at http://www.treasury.gov.au/Policy-Topics/Taxation/Tax-Treaties/HTML/Income-Tax-Treaties .

Here is the relevant article from the one with Spain:


Article 14
Independent personal services

(l) Income derived by an individual who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless a fixed base is regularly available to the individual in the other Contracting State for the purpose of performing the individual's activities. If such a fixed base is available to the individual, the income may be taxed in the other State but only so much of it as is attributable to activities exercised from that fixed base.

(2) The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the exercise of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.


Bilateral agreements like this take precedence over national law, so your client in Spain has no business withholding a part of your payment for any Spanish taxes, and they will need to pay you whatever they have already withheld ASAP.

A few countries, e.g. Taiwan and Morocco, do have fiscal provisions according to which foreign suppliers of services become liable for income tax in the country they supply to, but when there are double tax agreements, the provisions of these take precedence over such domestic tax law, as I mentioned.

If you end up with a case where no double tax agreement exonerates you from such taxes, you need to take it into account before you quote and add such taxes to your rates. If you do end up paying such taxes, they may well be tax deductible in your own country in one way or another, but such calculations can be complicated, and it’s impossible to predict how much it will save you in domestic tax.

In any case, I would always quote the full amount of domestic tax in the client’s country up front (and remember that domestic tax will also be deducted from the increase). If I recover any of it later, it can cover some of the cost of the additional bureaucracy and possibly higher accountant fees.


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Tom in London
Wielka Brytania
Local time: 19:34
Członek ProZ.com
od 2008

włoski > angielski
Rules Jul 17

Question:

Billing to Spain as a foreign resident freelancer - what are the tax rules?


Answer:

The only tax rules that apply are the tax rules of the country where you are registered as a taxpayer.

It would be illegal for you to attempt to apply the tax rules of any other country.

It would also be illegal for any other country to impose its tax rules on you, unless there is a specific bilateral agreement in that sense between your country and that country.

[Edited at 2017-07-17 13:03 GMT]


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Roy Williams  Identity Verified
Austria
Local time: 20:34
niemiecki > angielski
That's odd Jul 17

I have clients in Spain, which a bill. I've never paid nor had tax withheld from amounts due. In the agreement it was even stated that as
a freelancer I was responsible for my own taxes and that they (the client) would not charge or calculate such tax.
And if you're not a direct employee, why would they?


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Alexander Somin  Identity Verified
Niemcy
Local time: 20:34
Członek ProZ.com
od 2014

angielski > rosyjski
+ ...
Certificate of Tax Residence Jul 18

I would recommend obtaining Australia's Certificate of Tax Residence from your tax authority and sending it to your client in Spain (to not to pay taxes in Spain). This is quite a usual thing for clients in Spain.

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Katalin Horváth McClure  Identity Verified
USA
Local time: 14:34
Członek ProZ.com
od 2002

angielski > węgierski
+ ...
Previous thread including discussion about Spain and taxes Jul 18

http://www.proz.com/forum/business_issues/312617-translation_agency_asking_for_certificate_of_tax_residence.html

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Ibex Alley
Australia
Local time: 04:04
Nowy użytkownik
hiszpański > angielski
NOWY TEMAT
Thank you! Jul 19

Thanks so much to all of you for your very helpful replies – this thread has told me more about what I need to know than hours of online research.

Much appreciated!


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