Globalisation, the digitisation of business and the rise of remote work have radically transformed the way we understand labour and professional relationships. Nowadays, it is possible to work from anywhere in the world with a computer and a good Internet connection. This trend has given rise to an increasingly frequent figure: the digital nomad. Spain, as an attractive destination for its climate, its quality of life and its specific legal framework, has become a reference point for those who want to telework from abroad.
However, the big question that arises is the following: how do digital nomads and teleworkers tax in Spain?
The legal framework: the Startup Law
The Law on the Promotion of the Ecosystem of Emerging Companies, popularly known as the Startups Law, has introduced a novel tax regime that aims to attract international talent. Among its most outstanding measures is the creation of a special visa for digital nomads, as well as a favourable tax regime that simplifies and reduces the tax burden for foreign professionals who move their residence to Spain.
This visa allows foreign teleworkers to reside and work in Spain for companies outside the country for an initial period of one year, extendible up to five. In parallel, those who obtain it can take advantage of the expatriate tax regime, popularly known as the “Beckham Law”, with clear advantages over the ordinary personal income tax regime.
The applicable tax regime
The special regime for expatriates allows taxation as a non-resident for six years. Instead of subjecting all its global income to personal income tax, the digital nomad only taxes on income generated in Spain, which is a big difference in the tax base. In addition, the first 600,000 euros of salary are taxed at a fixed rate of 24%, while what exceeds that figure is taxed at 47%.
This measure is especially interesting for professionals with high incomes, who thus avoid the progressivity of the Spanish personal income tax, where the higher brackets reach rates close to 50%. However, it must be nuanced that this regime is not automatically applicable: it requires an express request to the Tax Agency and meet strict requirements, including not having been a tax resident in Spain in the previous five years.
European and non-EU digital nomads
It is not the same to be a citizen of the European Union than to come from a non-EU country. In the first case, access to Spanish territory is easier thanks to the free movement of persons, but it will also be necessary to define the tax status. The Tax Agency considers a resident any person who stays in Spain for more than 183 days a year, or whose economic interest base is in the country. This means that many digital nomads end up being considered tax residents even if they formally work for foreign companies.
For non-EU nationals, the specific digital nomad visa is the main way to legally telework from Spain. This visa not only opens the door to residence, but also to access to the special tax regime. It is, therefore, a measure of attraction of human capital and international positioning of Spain as a remote talent hub.
Teleworking for foreign companies: what about personal income tax?
One of the most complex issues is the taxation of income when the employer is a foreigner. In general, if the person spends more than 183 days in Spain, he is considered a tax resident and must be taxed in the country, unless he is subject to the repatriated regime. Even in those cases, it is possible that the foreign company does not practice personal income tax withholdings, which forces the worker to submit quarterly or regular declarations directly.
In addition, there are situations in which a double taxation conflict may arise, especially if the country of origin also considers the person a tax resident. In such cases, the double taxation agreements that Spain has signed with numerous states come into play, whose objective is to prevent the same income from being taxed twice.
Practical aspects: Social security and contributions
Beyond taxes, another key point is the Social Security contribution. In principle, a worker who is established in Spain should contribute to the Spanish system, unless he retains a displacement certificate (A1 forms in the EU) that allows him to continue contributing in his country of origin. This issue usually generates confusion, so it is essential to analyse each case individually.
Likewise, for self-employed workers who choose to settle in Spain, it will be mandatory to register as self-employed, unless they continue to contribute in another country in a manner recognised by Spanish Social Security. This also involves complying with VAT obligations and paying monthly fees, which can significantly disrupt the financial planning of a digital nomad.
Taxation of additional income
Many digital nomads not only receive salary income, but also diversify their activity with freelance projects, consulting, content creation or investments. In these cases, additional returns are also subject to taxation in Spain if tax residence is considered here. The expatriate regime can be advantageous to centralise everything in a reduced rate, but if you opt for the general regime, these incomes will have to be integrated into the tax base of the personal income tax, with the corresponding progressivity.
The importance of planning
The taxation of digital nomads and teleworkers in Spain opens up opportunities, but also poses challenges. It is a field where the details make the difference: the length of stay, the country of origin, the existence of double taxation agreements, the nature of the income or the possibility of benefitting from the special regime. A poorly planned decision can result in an excessive tax burden or in sanctions from the Tax Agency for breach of obligations.
It is best to have specialised advice before setting up residence in Spain. Good tax planning can optimise taxes and ensure regulatory compliance, avoiding unpleasant surprises.
Orihuela Costa Counselling: your ally in international taxation
At Asesoría Orihuela Costa we work every day with clients who, like you, want to take advantage of the advantages of living and working from Spain without losing control over their taxation.
Not only do we analyse your obligations with the Treasury, we accompany you throughout the process: from obtaining visas to Social Security management, tax returns and wealth planning. We know that the important thing is that you can concentrate on your work and enjoy life in Spain with the peace of mind that your taxation is in good hands.
