Hacienda audit closed in my favor, the docs that mattered
Hacienda is getting so aggressive lately. I heard they are flagging anyone with the DNV who earns over 100k automatically now. It is basically a manual review for everyone moving to the north.
Just add it as a comment or in the address line. Hacienda doesn't care how it gets there as long as the tax ID is visible on the PDF. I just typed mine next to my name.
This is exactly why I tell people not to DIY the tax part of the DNV. You saved yourself a fortune by having those invoices ready. I am curious if they looked at your social security payments too. If you are a freelancer on the DNV, did they check if you were paying into the Spanish RETA system or if you had the S1 form from the UK? That is usually where they get people in these audits.
The surf in Zurriola is great but I don't know if it is worth an AEAT audit. I am in the middle of this right now and it is making me want to move to Portugal. My inspector is being a total nightmare about my US 1099 forms. They keep asking for a Spanish version of a document that doesn't exist in our system. Did your gestor handle the talking or did you have to go to the office in person?
I did the meetings myself. It was terrifying but being polite and having a physical folder of paper seemed to win the guy over. They hate digital files for some reason.
Don't move to Portugal yet. Their tax breaks for nomads basically just ended. Spain is still better if you can survive the first year of audits. Just get a local San Sebastian gestor who knows the specific people at the local office. it makes a world of difference.
I am glad it worked out for you but 24 percent is still a lot of money when you realize the cost of living in Donostia has shot up so much lately. I hit a similar snag with my invoices because I didn't have the date of service listed clearly enough. They tried to claim the work was done before my residency started. It is like they look for any tiny reason to kick you off Beckham Law and back to the 45 percent bracket.
Exactly this. They aren't trying to be helpful. They are looking for revenue. If your paperwork isn't perfect, they see it as an easy win for the tax office. Always assume they want to find an error.
Getting the certificate of tax residence from the UK is such a pain in the ass though. HMRC takes forever to mail those out. I am applying for the DNV next month and I am trying to get all my ducks in a row now because I do not want to be stuck in limbo like you were. Did the inspector ask about your rental contract in San Sebastian at all? I heard they are checking if people are actually living here full time or just nomadic.
This is a huge relief to hear. I am in the middle of a similar check in Malaga. Did they ask for a social security coverage certificate too? I am worried my home country won't issue one for 2024 anymore.
Yes, they did. I had to show the A1 form from the UK to prove I was paying into their system and not the Spanish one yet. Without that you are on the hook for the Spanish social security fees which are a pain.
The invoice thing is huge. My gestor in Madrid told me the same thing about the NIE. It feels stupid putting your Spanish tax ID on an invoice for a company in Brooklyn that doesn't even know where Spain is on a map, but Hacienda is obsessed with those formalities. Did you have to get sworn translations for the bank statements too? I have heard different things about whether the Donostia office requires official translations for the bank stuff or just the contracts.
I had a friend in Bilbao who got rejected because they didn't have sworn translations for their UK bank docs. The Basque offices can be way stricter than the ones in the south from what I have seen. Better to just pay the 400 euros for the translator and save the headache later.
Congrats on winning. San Sebastian is way too expensive to live in if you are paying the full Spanish tax rates. I hope you celebrated with some pintxos in the old town.
Wait, you said your NIE was on the US invoices? My US company refuses to add it because their accounting software won't allow extra fields. Am I screwed?
Congrats on closing the audit. That feeling of relief is the best. I moved to Donostia last year and I am terrified of the tax man. Do you think the US invoices were the main focus because of the amount or just because it is a non-EU country? I have a mix of German and Canadian clients and I am wondering if I should start prepping my folder now. Prevention is better than a two month panic attack.
I had the opposite experience in Valencia. My inspector didn't care about the UGE approval and insisted on seeing my physical passport entries to prove the 183 days. It was a total mess. Every office has its own rules.
Was the UGE application stamp really that important? I thought the digital approval notice was enough. I am also in San Seb and honestly the local tax rules for the Basque Country (Hacienda Foral) are so different from the rest of Spain that half the advice on Reddit doesn't even apply here. We have different thresholds and forms. I am surprised your US clients didn't complain about the NIE on the invoices. Mine told me it looked like a mistake.
The Beckham Law is great until they decide to audit you. Those of us on the standard regime don't get half this much trouble. Better to just pay the 24 percent and keep your head down.