Spain / Portugal

It is possible to legally avoid paying UK / Worldwide taxes by residing in Portugal, maintaining a business in Great Britain (England, Scotland, Wales, Northern Ireland) and / or operating a business in Spain.

If British nationals / business owners buy a house in Portugal on the border with Spain, and declare residency in Portugal, they can avoid a great deal of tax. For example, if they operate a UK company, any dividends they pay themselves from that UK company are tax free in the UK (as they are non-resident) and tax free in Portugal (as the right to tax UK dividends is with HMRC, so Portugal does not tax this under their double taxation treaty with the UK).

That's right, zero tax on your UK company dividend payments! By having residency in Portugal which has a double tax treaty with the UK, British nationals can have themselves declared non-resident in the UK, yet operate their UK business online / by phone from Portugal, and even make business trips to the UK in relation to that business!

If your business is totally UK based and need to pay yourself a salary in addition to any premiums you receive, you can set yourself up as a consultancy business in Spain, providing consultancy services to your UK company, where everything (rent, certain living expenses, vehicle lease, gasoline / petrol, your morning coffee and cake at cafes, etc.) pretty much is tax allowable. Being resident in Portugal keeps your UK company dividends 0% tax rated, while working in Spain ensures you benefit from their beneficial tax regime on salaries, etc.

British nationals can even operate a tourism business at their property in Portugal yet base the profit centre in Spain, by having their marketing and reservations operation in Spain. Many large Portuguese businesses, such as the main supermarket chains, base their head offices outside Portugal for this very reason; so why not take their example! Simply renting some low cost office space (a desk in a serviced office) or better still renting a small apartment in Spain allows you to fully register a Spanish business from around 100 Euros a month in rent!

Basing your business in Spain, even if the operational aspect is in Portugal, has many tax avoidance benefits;

1) You are able to acquire Spanish registered cars / vehicles which are typically 35% to 40% cheaper then in Portugal, and legally drive / keep them in Portugal as "Cross Border Workers" who are given company cars. Spain still allows businesses to provide company cars with all costs covered (private mileage / gasoline).

2) You are able to buy business products in Spain at far lower prices than in Portugal, and claim sales tax (IVA / VAT) back of course; many Iberian companies have a lower rate for Spain than Portugal for the exact same items. Although many consumer goods and foods are cheaper in Portugal, business items are generally much cheaper in Spain.

3) You are able to benefit from national public and private health care in Spain. Portuguese health care is renowned for being bad, very bad. Spanish health care though is generally one of the best in Europe. Not only that, but private health care in Spain is around 25% cheaper than the same in Portugal.

4) Spain offers tax incentives for new businesses during the first three years, Portugal does not. Spain has several interesting reduced sales tax (IVA / VAT) levels, for example, for imported antiques. In Spain a UK antiques dealer can import antiques from the UK and elsewhere, claim tax relief at source with the seller in the UK, and yet only pay 10% sales tax when they sell the items on, as opposed to 20% VAT in the UK and 23% IVA in Portugal.

5) By having your business tax affairs at arms length in another country (Spain and / or the UK), while residing in Portugal, you make it far more difficult for the tax authority of your country of residence (Portugal) to interfere. Portugal is notorious for bureaucracy; truly, operating a business in Portugal is considered to be a nightmare. They are also notioriusly bad at tax investigations / prosecutions, which make residing in Portugal a bonus.

6) If a British national buys the right home in Portugal, on the border with Spain, they can even have their Spanish business interests registered to a Spanish mobile number which they can carry with them and use in Portugal, without the need for expensive roaming.

Residing in Portugal has distinct tax benefits over residing in Spain, such as capital gains and inheritance taxes. In addition, typically, Portuguese building regulations are tighter, which means less chance of buying a house on a corruptly designated plot of land, and / or no chance of having a monstrous building being erected next to yours down the line, as often happens in Spain.

Suitable property includes this one; Spain / Portugal Property