Spain’s new digital nomad Visa. Spain’s new startups law offers tax benefits. It is a special visa to digital nomads and remote workers who move to the country. Here we analyse all the information available on this advantageous permit for non-EU nationals.

Perhaps the most interesting draw of Spain’s new startups law is the creation of an exclusive visa for digital nomads.

It grants non-EU freelancers and remote workers entry and residency rights in Spain, with less bureaucratic obstacles than there currently are and enticing tax benefits.

There are plenty of other perks that Spain’s new law startups law brings to foreign entrepreneurs, investors and startups.

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The new legislation defines digital nomads as “people whose jobs allow them to work remotely and change residence regularly”. This may not seem particularly groundbreaking, but their recognition in the eyes of Spanish law is what has allowed for a new visa and tax category to be created. 

A new digital nomad visa   

The digital nomad visa, referred to officially as the international remote worker visa (visado para teletrabajadores de carácter internacional), is part of the new startups law.

This visa is particularly promising for non-EU digital nomads from countries such as the UK, US or Australia for example, as until now getting a residency permit to live and work remotely from Spain hasn’t been at all easy, with the best option being to apply for the self-employment visa which requires a business plan, proof of funds and guaranteed earnings and more. 

It will also be available for remote workers with a contract for an overseas company, so it’s not just digital nomads who freelance for several clients who can apply.

The Spanish government wants to remove the existing bureaucratic hurdles these international workers face in a bid to make “Spain a paradise for talent”.

Duration of Spain’s digital nomad visa

The visa is available for one year. But it can then be renewed until reaching five years in Spain. At which point it will be possible to apply for permanent residency.

What are requirements of Spain’s digital nomad visa?

One of the visa’s requirements will be that applicants must earn at least 80 percent of their income from foreign companies.

It will also be necessary for those applying for the digital nomad visa to not have lived (been fiscal residents) in Spain for the previous five years.

International companies will be able to request a residency permit through the digital nomad visa for non-EU remote workers they wish to relocate to Spain, but these will have to be deemed highly qualified with either graduate and/or postgraduate studies or three years of relevant experience.

Applicants will also be able to get residency rights for their partner and children, although the specifics have not yet been released.

What are Taxes?

It’s widely reported that Spain’s tax regime has dissuaded many international workers from setting up shop in the country up until now.

The new startups law addresses this with fiscal benefits for remote workers and digital nomads that move to Spain. In fact, they will pay less income tax than self-employed and contract workers that already live and work in the country.

New digital nomads will be able to pay Non-Residents Tax (IRNR) rather than the regular income tax (IRPF) Spain’s resident workers pay. Non-Resident Tax was previously only applicable to non-residents such as second-home owners, but an exception has now been made for digital nomad visa holders even if they spend more than 183 days a year in Spain and are therefore technically fiscal residents.

IRNR is generally 25 percent in Spain and nomads and remote workers will pay this rate, as long as they earn below €600,000 a year. 

Again, they will have to demonstrate that less than 20 percent of their income comes from companies based in Spain for this IRNR tax to apply.

This favourable tax rate will be available to them for four years. 

Tax fraud by digital nomads and fake non-residents

Spain’s tax agency has announced it will double down on investigating tax evasion by digital nomads and other remote workers who claim not to reside in Spain in order to get better tax rates.

Spain’s Agencia Tributaria announced that it wants to “intensify its control on residents who artificially reduce their fiscal bill by using the non-resident tax”.

Spain considers its resident population to be tax residents if they spend more than 183 days in Spain, their main economic interests are in Spain and their spouse and/or children live in Spain.

According to Hacienda, as Spain’s tax agency is also known, the focus will be on residents in Spain who meet this criteria and should therefore pay IRPF that applies to all their worldwide income, but instead file their taxes using the more favourable IRNR non-resident tax which applies only to income made in Spain.

Non-resident tax (IRNR) is generally 24 percent whereas IRPF income tax is progressive based on earnings and can go up to 47 percent.

José María Mollinedo, general secretary of the Spanish Tax Technicians Union (Gestha), told 20minutos that these ‘fake non-residents’ usually have a high income and live in Spain with their families.

Precautions on Tax Fraud

Of the measures announced by Hacienda, the ones that stand out for catching residents who claim to be non-residents are “strengthening control over online payments through entities or applications located abroad” and “boosting investigations into cryptocurrencies to locate assets subject to seizure and with links to criminal networks”.

The Spanish tax agency also talks about carrying out peinados, ‘combing’ the country’s underground economy, in the sense of tracking undeclared payments.

The warning comes just weeks after the Spanish government fully approved its highly anticipated Startups Law, which includes favourable tax conditions for foreign entrepreneurs and digital nomads who move to Spain and bring their talent with them.

According to the legislation, foreign workers who get Spain’s new digital nomad visa can pay non-resident tax AND stay longer than 183 days a year, but this is subject to them not earning more than 20 percent of their income from Spanish companies, and earning below €600,000 a year.

Spain’s digital nomad visa is for non-EU foreigners, giving them the right to residency in Spain. Hacienda’s message will serve as a deterrent from breaching the rules of the new visa.

What is Spain’s visa for entrepreneurs?

But perhaps the tax fraud crackdown should be primarily aimed at EU digital nomads and remote workers whose EU rights to freedom of movement within the bloc and free movement of capital allow them to sidestep the 183-day rule more easily.

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