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Keep employee on uk payroll when residing in Spain

Is it necessary?

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a Client of ours has an employee who is going to live in Spain permanently. The staff member is going to work remotely so all work will be carried out in Spain - so they will remain as an employee.

has anyone encountered this before. My client has asked for some advice on this and it is my understanding that they would need to register for payroll in Spain and pay that staff member under the Spanish tax system as that is where the work is carried out and where the residency of the employee is so social security is paid in the country that the work is completed.

if that is the case they will need to employ a Spanish company to run that.

would that employee then be p45 off the uk payroll as they will have no income earned in the uk and will be non resident in the uk? 


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22nd Sep 2018 12:50

I believe your client, with the help of a Spanish accountant, would need to setup a Spanish branch (this would not be considered a separate legal entity). His Spanish wages would be an expense in the UK company's accounts.

Then the Spanish branch would operate Spanish payroll, and P45's/P85's completed.

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By accountantccole
24th Sep 2018 11:47

Definitely need local advice for your client and the employee. The client is likely to get caught by Spanish employment rules, so make sure they fully understand what this means in terms of Social charges/NI equivalent.

Watch out with the branch, if it is anything like France they can be expensive to set up and run (but might be a necessary evil). The local accountant might be able to come up with a more suitable arrangement for you

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