GIB WORKERS LIVING IN SPAIN FACE ADMIN OBSTACLES

With the imminent dawn on tighter tax and social security controls Spanish and other cross border workers are being urged to make sure they know their rights and obligations. The Chronicle commissioned a briefing report from Hassans (see page 4) which sets out key issues.

It was reported earlier this year that Spanish officials were looking to ensure that cross-border workers properly regularise their situation.

The operation would see people living in Spain declaring their income and in some cases paying tax in Spain especially if they have any income or taxable assets there as well.

Statistically 32% of Gibraltar’s employees or business owners are resident in Spain.

For cross border workers – those that live in Spain for more than 183 days within the calendar year – they will be considered to be tax resident in Spain and therefore liable to Spanish taxation in accordance with normal rules applicable in Spain.

The Spanish Tax Authorities can and are challenging many cross border workers’ residency status and therefore their tax obligations and payments.

They can and are challenging tax returns, or lack of, for the years 2010, 2011, 2012 and 2013, representing the four year limitation period for review of taxation matters except in the case of tax fraud.

And interest for late payment penalties can apply in appropriate circumstances.

Social Security

Individuals are subject to the legislation of the country where they actually work as employed or self-employed persons in relation to their social security rights and obligations.

But special rules apply to healthcare and unemployment.

Access to healthcare is possible on both sides of the frontier for cross border workers.

For use of Spanish healthcare frontier workers need to obtain Form S1 from the Gibraltar health authorities.

This form then entitles the employee and his/her dependants to register for health insurance in Spain.

However, the employee’s dependants – husband or wife and children – can only access healthcare in the country where they live.

Unemployment

In the case of unemployment, cross-border workers can only claim unemployment benefit from the country where they live.

And it follows that the entitlement and the amount of benefit are based on the rules in the country of residence and periods of employment in other qualifying countries such as Gibraltar.

The employee must ask the authorities in the country where he/she has worked for a U1 document (the former E301 form).

Pensions

The employee is entitled to an old age benefit from each of the EU countries where he/she has been insured when he/she reaches the national pensionable age provided all the requirements set forth in the legislation of each of these countries regarding entitlement to the retirement pension are fulfilled.

To gain entitlement to an old age pension, the competent authorities of each EU country where the employee has been insured will calculate the amount of the benefit taking into consideration all the periods of insurance completed in each of the countries.

The employee must submit his/her application for this benefit before the authorities in the country where he/she resides provided he/she has worked in this country.

If the employee has never worked in the country where he/she resides, the application must be submitted before the authorities in the country where he/she last worked.