On January 1, 2023, Spain made a significant leap forward in attracting global talent by joining the growing list of countries offering a digital nomad visa. This groundbreaking development came through the enactment of the “Startups Law,” approved by the Spanish government in December 2022. The law establishes residence permits for international teleworking, specifically targeting citizens from outside the European Union.

Background and Context for the Digital Nomad Visa

For decades, Spain has been a popular location for digital nomads due to its climate, cities, cost, and reliable internet speeds. However, until 2023, many digital nomads could only stay in Spain for a maximum of 3 months on a tourist visa.

The approval of the digital nomad visa has generated considerable interest within the global and remote work community. This new residence permit allows citizens from outside the European Union to reside and work in Spain for several years while developing their professional activity remotely or digitally for a companies located outside of Spain.

Eligibility and General Requirements

There are two primary scenarios under which one can obtain the digital nomad visa:

  • Employed Workers: For those with employment contracts from non-Spanish companies.
  • Self-Employed Professionals: For freelancers and independent contractors providing services to clients outside Spain.

To be eligible for the digital nomad visa, applicants must meet the following criteria:

  • Professional Qualifications: Hold a university degree, postgraduate qualification, or professional training certification OR have at least 3 years of verifiable professional experience in the relevant field
  • Employment Status: Work for or provide services to companies located outside of Spain and demonstrate that no more than 20% of total professional income comes from Spanish entities
  • Work Arrangement: Provide an employment contract of at least 1 year’s duration (for employees) or proof of ongoing service provision (for self-employed)
  • Remote Work Capability: Demonstrate that the work can be performed remotely using telecommunications technology
  • Professional History: Provide documentation proving at least one previous employment or professional relationship during the last 3 months
  • Clean Criminal Record: Submit a certificate proving no criminal record in countries of residence for the past 2 years and in Spain
  • Financial Stability: Prove a minimum annual income of 25,920 euros (2,160 euros per month) from remote work activities
  • Health Coverage: Obtain private medical insurance from a Spanish provider for all visa applicants

For Employed Workers:

  1. Company Eligibility: The employing company must have been in operation for at least 1 year.
  2. Remote Work Authorization: Obtain a signed authorization from the employer confirming that the work can be performed remotely.

For Self-Employed Professionals:

  1. Client Diversity: Provide services to at least one company or client.
  2. Income Limitation: Ensure that no more than 20% of total professional income comes from Spanish companies.

If applied for from the applicant’s Home country, the visa is valid for one year. After expiration, a residence permit may be requested for 3 years (with possibility of renewal for more years).

Tax Implications: The “Beckham Law” Advantage

The digital nomad visa has created an exciting opportunity for digital nomads seeking to travel for work purposes. However, its popularity is even more significant for tax purposes, potentially allowing visa holders to benefit from the Expatriate Tax Regime, commonly known as the “Beckham Law”.

The approval of the Startups Law has brought several changes to the Beckham Law Tax Regime. One notable change is the inclusion of digital nomads, who were previously excluded from this tax regime, which was previously intended for individuals starting employment contracts in Spain or appointed as administrators of Spanish companies.

According to Spanish Personal Income Tax Law, specifically Article 93 which governs the Beckham Law Tax Regime, individuals can qualify as teleworkers if they hold the international telework visa established by Law 14/2013 to support entrepreneurs and internationalization, also known as the Startups Law.

It is important to note that individuals without this specific visa can still access this regime as teleworkers by providing alternative evidence of their status. Additionally, those with a self-employed visa must undergo a more thorough evaluation to determine eligibility for the Special Regime Beckham Law.

Overall, the Beckham Law Tax Regime offers significant tax benefits for digital nomads coming to Spain. This includes a flat tax rate of 24% on salaries (with a 47% rate for amounts exceeding 600,000 euros) and no taxation on foreign income such as dividends, rental income, and capital gains. These advantages stand in contrast to the progressive taxation on worldwide income imposed on regular tax residents in Spain.

Conclusion

Spain’s digital nomad visa represents a strategic move to attract international talent and boost the country’s digital economy. By combining an attractive lifestyle with favorable tax conditions, Spain is positioning itself as a premier destination for remote workers and digital entrepreneurs from around the world.

As with any major life decision involving international relocation and taxation, prospective applicants are strongly advised to consult with legal and tax professionals to fully understand the implications and requirements of the digital nomad visa and associated tax regimes.

Author: B LAW & TAX