|Both independent contractors and hiring companies face complex cross border rules if they are located in different countries. Because of this we have created our ‘Contractor Solutions’ series with actual circumstances brought to us by our international clients. |
The first article was a solution for a French company hiring a contractor in the Netherlands, and the second article addressed questions from a contractor wanting to move to Portugal.
This new article deals with four different scenarios in Spain, from both companies and international/Spanish contractors.
We have compiled all these questions so Campbell Curtis, our Solutions Expert, can address them. We hope you find what you need here!
And if you don’t, drop us a comment below in the Contact Us form so we’d get back to you!
Questions we cover
How to Hire and Pay Independent Contractors in Spain
The first set of questions are from a UK company that has an employee that wants to convert to a contractor in Spain.
|“I have a permanent remote member of staff with a dual UK/Spanish passport. She has been UK based, but is now aiming to return to Spain full time to move back in with her parents. |
She is requesting that after 182 days of working with her new remote contract, she will be given a new contract and be registered to work legally in the country that she resides in, whether that’s Spain or elsewhere.
We don’t want to open an overseas office, or be held liable for overseas tax for one remote employee so would like to know what this would cost to do as an umbrella company worker please.“
Campbell: Thank you for reaching out, and I can break this down for you into a simple hiring solution. It is fairly common these days for employees to look for a remote role in a different country, so we face this situation frequently.
Because of her dual nationality, she won’t need to worry about immigration or work permits in Spain, so that removes one typical challenge. She can proceed just like any other Spanish resident once she arrives home.
Now, this is where the value of an umbrella company comes in, so you can hire her as a contractor in Spain. We can do this for you right away. An umbrella company adds an intermediary to your relationship, so you don’t have any compliance worries.
Since she is the one requesting the change, it is possible for you to split the nominal fees charged by the umbrella company.
|“How can a UK employer can support a remote employee in Spain without having to open an overseas office or be liable for overseas tax?“|
Campbell: I assume that the first 182 days she still wants to be under a remote employment contract, but I don’t recommend that at all. That time period tells me that she may be trying to finesse her tax residency in the UK or Spain (tax residency kicks in after 183 days in Spain).
She might be hoping to avoid Spanish resident tax rates the first six months if the payment comes directly to her from the UK (non-resident rates are lower). But her family/home ties may make her a tax resident already. Either way, that’s not your concern and the umbrella company will advise her on tax residency and rates.
As you point out, you would have to use some type of formal employment entity in Spain for it to be legal. It is better to have her working as a contractor from day one with the umbrella company. This also gives you more oversight than if she is just freelancing in Spain on her own.
There is no reason for your company to start with an employment relationship in Spain, and then convert her to a contractor.
|“After 183 days does my remote employee have to register to work legally in the country that they reside in?“|
Campbell: If you use our contractor solutions in Spain, we won’t be using the separate 182 day employment contract she requested. She will be working legally right away with the umbrella company.
All she has to do is register for tax withholding and social contributions in Spain, and she may already have a tax id number.
As a Spanish resident, she can do any work she wishes at home. But it would be another story in other countries if she wants to move around. Let’s deal with that later if it comes up.
|“How to have remote workers in Spain without registering an office?“|
Campbell: Your worker will now be essentially ‘employed’ by our umbrella company, so your company has no duty to register an entity or an office. We handle everything related to payment, administration, compliance and taxation.
To be clear, your company still manages the worker’s remote role, time and production. We have no say in any of that.
|“How can umbrella companies help you have remote employees in Spain without worrying about an overseas office or tax?“|
Campbell: The worker is no longer your employee while in Spain, and they will have a new contract with you as self-employed. The umbrella company administers payment under that contract.
So, you don’t have to worry about setting up an office or tax withholding. That is now the role of the umbrella company, and your sole obligation is to remit monthly payment. I hope this answers your questions, and we can get started as soon as you are ready!
Setting up as an independent contractor in Spain
The second set of questions are from a UK citizen who is looking to contract from Spain with a UK company.
|“I am a British citizen and moved to Spain in February 2022.|
I am hoping to start a contract for a UK company but will be working remotely from Spain.
When I moved to Spain I applied for a non-lucrative visa and got my TIE on arrival. I recently reapplied for an extension to the TIE and am waiting for the new card to arrive which allows me to stay for another year until February 2024.
In order to be able to take on this contracting role I need some advice and guidance on if I need a work permit/visa & if I need to set up my own company etc. I want the least admin intensive approach for myself in terms of how the job will operate from Spain.“
Campbell: Hello and thanks for your questions! I think we can help you with this so you don’t run into any compliance problems. Taking on this contracting role can be done easily by using one of our umbrella companies in Spain, that specialises in supporting foreign contractors.
Your TIE residence card may not be valid if you were not working before. You might have to reapply listing your new work activity. Once we start setting up your service, the Spanish umbrella company can help sort that out.
At that point, the umbrella company can step in as a sponsor for a new work permit. All the rest of our support measures would begin right away as soon as you and the company agree to using our contractor solutions in Spain.
|“How to start a contract for a UK company while working remotely from Spain?”|
Campbell: You would have to have permission to work (visa) and a contract set up with the UK company.
|“How can umbrella companies help British citizens working remotely from Spain?”|
Campbell: Since 2020, British citizens require a work permit in EU countries, and an umbrella company can sponsor that for you in Spain. We also administer all payments and tax withholding for you.
|“Why are umbrella companies the least admin intensive approach for contractors working remotely from Spain?”|
Campbell: Because they have legal entities in Spain that are already set up to administer your contract and payments. All we need is the confirmation from the UK company that they are willing to work through an umbrella company.
|“Can I contract remotely from Spain for a UK company while I am on a non-lucrative visa?”|
Campbell: This would be a question for the legal experts at the umbrella company who can guide you in the right direction under Spanish law.
|“Do I need a TIE to work remotely from Spain?”|
Campbell: The TIE gives you the right to live in Spain, and must also list any work activity you have. You may also need a separate work permit.
|“Do I need to wait for my TIE card to arrive before I can start working remotely in Spain?”|
Campbell: Because you might need a new TIE with your remote work listed, it will depend on the advice of the umbrella company.
|“Do I need to set up my own company to work remotely from Spain?”|
Campbell: No you don’t, and it could add more complexity and delays in starting work. You can always set up a company later and transition if you wish.
|“Where to get advice on doing contract work remotely from Spain?”|
Campbell: Our Spanish umbrella company will be the best source of how to set up your remote work contracts and payments. After all, they do this everyday for thousands of foreign workers in Spain, so their system is in full compliance.
Independent Contractors and Autonomo (Self Employed) Spain: Taxes and Residency
|“I am looking for an umbrella company in Spain. I am a freelancer, I have a residence in Poland, and currently I am employed in Poland with a Polish umbrella company. My purpose is to move my tax residence to Spain. Thanks in advance for any help or advice.“|
Campbell: Thanks for making contact Alex! We do have umbrella companies in Spain that can help you with this transition. The tax rates are different for non-residents in Spain, but that would only apply to your first six months. Then you would be a tax resident with those applicable rates.
The umbrella company will calculate and withhold all of this for you. Although you are a contractor and self-employed (autonomo) in Spain, you are technically an employee of the umbrella company. Your tax rates will reflect that, as you are used to in Poland.
|“How can I move my tax residence by using an umbrella company in Spain?“|
Campbell: Tax residency is applied automatically after you meet the criteria, and the umbrella company will let you know of any change in rates and withholding. They specialise in contractors tax solutions in Spain.
|“How can EU freelancers benefit from an umbrella company in Spain?“|
Campbell: If you are an EU citizen you wont need a work permit in Spain, but there are many other benefits of using an umbrella company. Here are a few:
- Manages all client payments, contractor tax withholding and any social contributions
- Issues the contractor a payslip each month, to a local or foreign account
- Sponsors work permits (if needed)
- Helps set up the contract with the company and contractor
- Moderates any disputes between the company and contractor
- Advises on access to totalization and double taxation treaties
Remote Work: Contractor Solutions in Spain
The final inquiry about contracting in Spain comes from a resident wanting to work for a remote client located in Italy.
|“I currently live in Spain but have a remote contract with a company based in Italy. I am looking for an umbrella company in Spain.”|
Campbell: You came to the right place! We have fully vetted Spanish umbrella companies that handle every part of your remote work contract and payments.
Even if you don’t need a Spanish work permit, the umbrella company is a true third party to the remote contract with your client. This solves many of the challenges with working as self-employed in Spain.
|“How do I begin using an umbrella company in Spain for a remote contract with a company based in Italy?”|
Campbell: All you have to do is forward the details of your contract and Italian client, and we will take care of the rest. There is a fee for the umbrella company contractor solutions in Spain, but you can suggest to your client to share the cost. There are huge benefits for both of you! We look forward to working together.