Ever since digital nomad visas were announced in Spain to attract remote workers, one of the main proposed incentives was favourable tax conditions. It was widely believed that remote workers would either receive a reduced fixed rate, or be able to access non-resident tax rates through a special regime commonly known as Beckham’s Law.
When the ‘Start-up Act’ was passed in late 2022, it was originally reported that foreigners staying in Spain while conducting remote work could benefit from a reduced tax rate of 15% for 4 years, but this has since been revealed as a corporation tax benefit for start-up businesses, not for individuals.
As for gaining non-resident tax status, digital nomads were unfortunately left in the dark for most of the year after the visa launched in 2023. While waiting for the government to clarify regulations and for the tax agency to update their forms, remote workers were unable to apply for Beckham’s Law.
Finally, in December 2023, an official state bulletin brought several months of uncertainty to an end by confirming which remote workers would be able to apply for the special tax regime.
If you are planning to get a digital nomad visa to move to Spain and work remotely, here’s the latest information you should know about tax obligations for remote workers in Spain.
How long can you stay in Spain without paying tax?
Compliance with income tax in Spain is important if you plan to work for money while staying in the country, even if all or the majority of your income comes from sources outside of Spain.
Anyone who spends over 183 days in Spain out of the year will be considered a resident for tax purposes, and will be taxed at the same rates as a resident for that tax year.
So, even if your ‘economic interests’ are based outside of Spain – e.g. working remotely for a foreign employer – you would still be considered a tax resident in Spain if you stayed in the country for more than half of the year.
If you spent less time than this in Spain while working remotely, you would be taxed at the non-resident tax rate on your income within Spain only (fixed at 19% for EU residents and 24% for non-EU residents).
Unless you only wanted to work remotely from Spain for less than 6 months, you would inevitably become a tax resident, as renewing the digital nomad visa requires you to live in the country for a minimum of 183 days a year.
This means you would be liable for tax on worldwide income at the same progressive rates as a Spanish citizen, with the obligation to file an annual tax return in Spain.
With these progressive tax rates reaching almost 50% in some parts of Spain, this isn’t very attractive to digital nomads who potentially want to move to Spain.
This is why the possibility of remaining a non-resident for tax purposes through Beckham’s Law was suggested, which allows successful applicants to benefit from the non-tax resident rate of 24% on annual income up to €600,000.
Do remote workers have to pay tax both in Spain and abroad?
While it can be off-putting to think about having to pay tax in Spain on income earned in another country as well as paying tax on it in that country, dozens of countries have agreements with Spain to avoid double taxation.
This doesn’t just include EU member states, but also countries across the world like the UK, the USA, Canada, Australia, New Zealand, China, Japan, South Korea, India, South Africa, and more.
These agreements ensure that taxpayers earning income in two or more countries are not taxed on the same income twice.
You might think that income tax should be paid in the country where the income is generated, but under double taxation conventions, tax should typically be paid in the country where the individual is living as a tax resident.
So, if you stay in Spain for more than 183 days a year and become a resident, you will pay tax in Spain on your worldwide income, then follow the double taxation agreement rules for the country where the income was generated to make sure you aren’t taxed there as well.
On a digital nomad visa, remote workers can earn up to 20% of their income from sources within Spain, but must earn at least 80% from employers outside the country.
As a tax resident in Spain, you would pay tax on all of this income in Spain. Whereas if you were not considered a resident for tax purposes, you would only pay tax in Spain on the earnings within Spain, then pay tax on any earnings from outside Spain in the country where the income was generated.
Under Beckham’s Law, remote workers could be tax residents in Spain and pay tax on global income like residents, but still benefit from the non-tax resident rate and double taxation agreements.
Can digital nomads apply for Beckham’s Law or not?
The big question that remote workers were waiting for an answer to was which workers would be eligible for this scheme, and when the system would be updated to allow them to apply for the Special Regime for Displaced Workers (Régimen Especial para Trabajadores Desplazados).
In December 2023, the Ministry of Finance and Civil Service (Ministerio de Hacienda y Función Pública) posted a state bulletin clarifying which digital nomads will be eligible to apply for the lower tax rate under Beckham’s Law.
It has now been confirmed that this special tax regime will officially be extended to include remote contract workers and those who relocate to Spain for innovative training, entrepreneurial, research, and development activities.
This will also apply retroactively, which is good news for remote workers who had been waiting to apply for this scheme after relocating to Spain in 2023, who may otherwise have missed the deadline of 6 months from their arrival in Spain.
There is currently no date for when the Modelo 149 form to apply for Beckham’s Law will be updated to include the option for remote workers, so digital nomads and tax agents still need to stay alert for further updates.
What about self-employed remote workers?
Unfortunately, not every type of remote worker who already came to Spain on a digital nomad visa or was planning to do so will qualify for reduced tax through Beckham’s Law.
The December bulletin mentioned that the scheme applies to employed workers with contracts (trabajadores por cuenta ajena), but did not mention self-employed workers (trabajadores por cuenta propia) other than entrepreneurs.
Therefore, it seems like self-employed freelancers (autónomos) who come to Spain on a digital nomad visa will not qualify for the special tax regime unless they’re engaged in innovative activities that are of financial interest for Spain.
To prove they are eligible in this way, the individual will need a report from a ‘competent authority’ approved by the General State Admission (Administración General del Estado).
As the digital nomad visa seems to appeal most to self-employed individuals and not contract workers whose employers have sent them overseas, this is no doubt disappointing news for them.
Tax advice for remote workers in Spain
Whether a Spanish digital nomad visa is right for you and whether Beckham’s Law would benefit you depend on many different factors, including your line of work, income level, and personal circumstances regarding family members.
As Spain is still in the process of refining its new and existing policies for foreign talent, current digital nomads and those who are considering remote work in Spain should keep up to date with the latest legal and fiscal changes for digital nomad visas.
Given the complexities of international tax laws, it’s best for remote workers to seek professional tax guidance to ensure they understand their tax obligations – both in Spain and in any other countries where they are generating income.
Should you need help from English-speaking lawyers, look no further than Manzanares Abogados for tax advice in Spain.