Spanish Digital Nomad Visa: An opportunity for non-EU citizens to live and work in Spain

The new Spanish Digital Nomad Visa became available to foreigners wishing to move to Spain but work remotely for a company based in a different country.

The Digital Nomad Visa is part of the 2013 Spanish Entrepreneur Law and subsequent Startup Law which was introduced to attract foreign skills and investment through a relatively easily obtained visa which also offers favourable tax regime.

This article provides an overview of the Digital Nomad Visa, including who is eligible, the application process, tax and general advantages for people looking to move to and live in Spain. While this article provides useful information, you should always seek advice from a specialist as there may be other options available which would be more suitable.

What is the Spanish Digital Nomad Visa?

The Digital Nomad Visa is a residence permit that allows foreigners (i.e. non-Spanish and non-EU citizens) to live and work for up to five years in Spain.

The visa can take as little as 20 days to obtain, if you use a fast track service, and also enables holders to travel freely around the EU.

At the time of application, you can also include your spouse and any children which means you can move your family to Spain with you.

In addition, the time spent living in Spain using this visa also count towards any application for Spanish nationality and ultimately permanent residence.

You can apply for the visa either from Spain while using a tourist visa or from your home country via a Spanish consulate. If you apply from Spain, you will be eligible for a 3-year visa as opposed to a 1-year visa if you apply via a Spanish consulate.

Who is potentially eligible for a Digital Nomad Visa

The Digital Nomad Visa has coincided with a post-Covid-19 rise in demand of people who wish to remain employed by their current employer, but work remotely from a different country.

This Spanish visa specifically enables foreigners to work remotely from Spain providing no more than 20% of their income does not come from a Spanish company and they continue to work primarily for the company who enabled the visa in the first place.

It also benefits people who consider themselves to be digital nomads – i.e. people who travel around the world and generate their income online.

Digital Nomad Application costs:

• € 73,26 application fee
• € 16.08 residency card fee (TIE)

Digital Nomad Application requirements

The Digital Nomad Visa is an option for both freelancers and also employed workers who work for a company based outside Spain. The premise is that the majority of your income is derived from non-Spanish entities.

If you are an employee, the company you work for must have been in operation for at least 1 year, that is, a real and continued activity of the Company within that year at least.

If you are a freelancer, you must work for at least one company which must also be located outside Spain.

In both cases, you must be allowed to work from Spain as per your contract with them.

In all cases, the following requirements must be met for a successful application:

• The company(s) you work for must be located outside of Spain.
• Any income received from Spanish companies must not equate to more than 20% of your total income.
• You must be able to demonstrate that you have been employed or contracted to work for a company for a minimum of 3 months prior to application.
• The contract must last for a minimum of 1 year.
• You have to be able to prove that you have 3 years of relevant work experience or have a Bachelor/Post-Graduate degree, or equivalent qualification from a reputable educational establishment.
• No criminal record for the past 5 years.
• You must not be prohibited from entering Spain.
• You must complete the application form, which is in Spanish so an understanding of Spanish language is required to complete the form – although is not a requirement of the visa itself;
• You must pay the application fee (around €73.26 + €16.08 for the residency card).
• Have private health insurance which provides full coverage throughout the whole of Spain except if you are enrolled in Spanish Social Security.
• Prove that you have €25,000 in a bank account plus an additional €9,441 per additional applicant (i.e. your partner or children). This amount is based on the minimum salary requirements (SMI) in Spain currently €12,500. Also if you are employee last payslips can prove the incomes.
• If you are an employee, a document from the company, authorising that you can remotely work from Spain and the document should include job position, salary and working conditions.
• Social Security Certificate stating that you remain on Social Security of your home country while in Spain if it exist a Social Security Agreement between both countries and if not prove that the foreign company (if you are an employee) has started the process to be registered in Spanish Social Security and that it is compromise to pay Spanish Social Security contribution once the authorisation if approved. If you are freelance, compromise you will pay Spanish Social Security contribution while working form Spain.

Once you have successfully applied you will also be required to spend at least 183 days/nights in Spain in the calendar year. This will mean that you will automatically be regarded as a Spanish tax resident. Even if you spend less time in Spain in the calendar year, you may still be regarded as a Spanish tax resident if Spain could be regarded as an economic centre of interest (i.e. your primary place of work).

It's therefore essential to understand your tax requirements before you begin your application and before you move to Spain.

Tax requirements and benefits of the Spanish Digital Nomad Visa

As you will almost certainly be considered a tax resident of Spain through the Digital Nomad Visa, it’s vital that you understand the tax requirements you face.

While Spain has a complex tax system for tax-residents, the primary tax benefit of working in Spain under the Digital Nomad Visa is that your income up to €600,000 will be taxed at a flat rate of 24% instead of the progressive rate up to 48%.

You will also not be required to pay additional wealth taxes or complete the Model 720 declaration.

This is because the Digital Nomad Visa enables the holder to be taxed under the Non-Resident Income Tax Regime.

You will also be able to apply for the Spanish Beckham Law in Spain which enables you to be considered a non-resident for tax reasons.

Any income that exceeds €600,000 in the tax year will then be taxed at 47%.

The tax situation can be complex and will require careful planning to ensure you receive a favourable tax rate on your income. You should therefore seek help from a Spanish tax specialist before making any application to ensure you have a plan and don’t get penalised for avoidable mistakes.

It’s important to note that working in Spain under the Digital Nomad Visa will not automatically exclude you paying tax on your income in another country if you are also deemed to be tax resident there, and if you are a US citizen, you will still be subject to Federal tax requirements which you must adhere to. This is also especially true if you are a digital nomad who travels and works around the world throughout the year.

How much tax you pay and where you pay tax will depend on the local rules and any double tax treaties that each jurisdiction has with Spain, assuming your tax residency becomes Spain.