Digital Nomads in Spain: Legal and Tax Considerations

Globalisation and the drive for online work have made the figure of the digital nomad a reality in countries such as Spain.

More and more foreigners want to move to our country and work remotely. For this reason, the State has created a new visa for digital nomads, which governs the different types of taxes and tax advantages that these people can have during their time of residence within our borders.

Any worker who has decided to settle in the country should be aware that Social Security currently offers important advantages for those who obtain a digital nomad visa in our country.

We will help you to find out everything you need to do to work legally in Spain and assume both the tax responsibilities and the benefits of having everything properly regulated.

Working remotely in Spain

The standard of living, the climate, the gastronomy… Spain has always been a magnet for workers who are lucky enough to work remotely for their own freelance projects or foreign companies.

If these reasons were already very attractive for foreign talent, now the scenario is even more interesting due to the new visa promoted by the national government. A series of measures have been approved with a single objective: to facilitate the procedures for freelancers or employees who telework while living in the country.

This measure reduces paperwork, makes it easier to obtain residence permits, and regulates the payment of VAT and personal income tax… With all these points regulated, the experience of living and working in Spain for a few years can only be a positive one.

Visas and residence: requirements

The digital nomad visa (or international teleworker visa) is a residence permit in Spain for non-EU citizens that can be extended for up to 5 years while they work on freelance projects or work with foreign companies.

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To obtain it, in addition to justifying that work is based in another nation, it is important to meet a series of requirements, including the following:

  • Not having entered the country irregularly and not having a criminal record.
  • In the case of professional activity, you must not invoice more than 20% of your income from Spanish companies or clients.
  • Certify that the work project that allows you to work remotely is solvent and has been maintained over time for more than one year, with an employment relationship with a foreign company of at least 3 months.
  • Stay 183 days or more within a calendar year in the country (tax residence in Spain).

With these requirements, it will be necessary to complete a series of visa applications and the payment of the corresponding fees in order to take up an employed or self-employed position at a distance in Spain.

Working legally: obtaining permits

When it comes to obtaining a digital nomad’s residence permit in Spain, there are two moments when the protocol varies: before setting foot on Spanish soil or once you are here as a tourist.

In both cases, you will have to go to the Large Companies Unit (Unidad de Grandes Empresas – UGE), a department in charge of these formalities that reports directly to the Ministry of Employment and Social Security.

  • Apply for a visa abroad: if you are still in your country of origin, you will obtain a 1-year permit to enter the country; once inside, you will have to apply for a residence permit through the digital nomad system.
  • Apply for a visa in Spain: in this case, you will have entered the country as a tourist and the UGE, once the requirements have been studied, will offer a stay permit for up to 3 years, renewable for 2 more, before obtaining a permanent residence permit.

Taxation: resident/non-resident status

A properly regulated digital nomad will have to pay taxes in Spain, although they are taxed differently from regular workers.

Holders of this type of special residence permit can opt for the application of the special regime for workers posted to Spanish territory (better known as the “Beckham Law“), whereby taxes are paid from non-resident status.

This has important tax advantages, as income tax will change from a progressive tax rate depending on the level of income – up to a maximum of 50% for the highest incomes in some Autonomous Communities – to a fixed tax rate of 24% for the first 600,000 euros of income.

This can only be the case as long as non-resident status is maintained. If the income obtained through Spanish companies exceeds 20 % of the total or if you have been resident in Spain before, you lose this possibility.

Of course, these taxes include personal income tax (IRPF) and VAT, which, like any worker in Spain, must be paid in the corresponding instalments or when invoices are issued to Spanish or European citizens, to the tax authorities.

Non-resident tax return

It should be borne in mind that the income to be taxed as a digital nomad (if the application of the aforementioned special regime is accepted) only corresponds to income that has been generated within Spanish territory.

The rest of the economic activity will have to be assessed under the taxation systems of the country of origin, where it will be necessary to provide documentation indicating that the money generated in Spain has already been declared to the Spanish Treasury.

Financial planning: bank accounts and retirement

The status of a remote worker does not require you to have bank accounts in Spain. However, many digital nomads choose to open one, both to carry out their day-to-day business and to make investment deposits in the financial market, which also has certain advantages under this residency regime.

As for the retirement system, the current legislation includes a retirement visa, which allows foreign citizens to settle or maintain their residence in the country for long periods without carrying out any type of economic activity.

Conclusion: assessing risks and opportunities

Digital nomadism is a reality in our country. Tax advantages have only confirmed a trend that boomed during the coronavirus pandemic when dozens of non-EU citizens settled in areas such as the Costa Blanca or the Balearic Islands.

Before deciding to live in the country permanently, it is advisable to carry out an economic analysis of the situation and assess the current risks and opportunities.

If the result is positive, knowing that the State will provide all the facilities if the indicated requirements are met is the key to taking the step and taking advantage of all the fiscal and social benefits of living in Spain.

If you have any questions on this subject, please contact our tax advisors in Barcelona.

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