If you are a remote worker who wants to live and work in Spain, you may be interested in the new digital nomad visa. This visa offers many benefits, but one of the most attractive ones is the lower tax rate you can enjoy in Spain.
However, you may have some doubts about how the tax system works for digital nomads in Spain.
For example, do you have to pay taxes in both Spain and your country of origin?
How much tax do you have to pay on your income? What are the requirements to apply for a special tax regime?
In this article, we will answer all these questions and more.
We will explain how to determine your tax residency status, how to apply for the Beckham Law, and what are the tax advantages for digital nomads in Spain.
Tax residency for digital nomads
The first thing you need to know is whether you are considered a tax resident or a non-resident in Spain. This will affect your tax obligations and rates.
According to the Spanish tax law, you are a tax resident in Spain if you meet any of these three criteria:
- You stay in Spain for more than 183 days in a calendar year
- You have your main economic activity or interests in Spain
- You have your spouse or dependent children living in Spain
As a digital nomad visa holder, you will most likely become a tax resident in Spain. This is because one of the conditions to renew your visa is to spend at least six months in Spain.
Being a tax resident means that you have to:
- Declare and pay income tax on your worldwide income (from Spain and any other country)
- Pay income tax at a progressive rate that can go up to 50% (depending on your region)
- Declare your assets abroad through form 720
- And comply with other obligations that you can find here
However, there is a way to avoid these obligations and enjoy a more favorable tax regime. This is by applying for the Beckham Law.
Beckham Law for digital nomads
The Beckham Law is a special tax regime that allows you to be treated as a non-resident for tax purposes, even if you spend more than 183 days in Spain.
This means that you can benefit from a lower income tax rate, and avoid paying other taxes that apply to residents.
The Beckham Law was recently expanded by the new Startup Law in Spain, which included digital nomads as one of the eligible groups.
To apply for this special regime, you have to meet these requirements:
- You have not been a legal resident in Spain for the last five years
- You move to Spain for work reasons (which is the case for remote workers)
If you meet these requirements, you have six months from the date of approval of your digital nomad visa to submit your application at the tax office.
If your application is accepted, you can enjoy the benefits of the Beckham Law for five years (plus the year of application). After that, you will switch to the general resident regime.
Tax advantages for digital nomads
The main tax advantage of being a non-resident under the Beckham Law is that you only pay a flat rate of 24% on your work-related income up to € 600.000, and 48% on any higher amount.
This is much lower than the progressive rate that residents pay, which can reach up to 50%.
But that's not all. As a non-resident under the Beckham Law, you also:
- Don't have to file form 720 (which requires residents to declare their assets abroad)
- Don't pay wealth tax
- Pay a lower capital gains tax, ranging from 19% to 28%
As you can see, these are significant advantages that can help you save money on taxes.
However, there is one question that remains: do you have to pay taxes in both Spain and your country of origin?
Double taxation for digital nomads
As a digital nomad, you work remotely from Spain, but your income source is not in Spain (at least not more than 20%). Therefore, you may wonder if you have to pay taxes twice: once in your country of origin and once in Spain.
This is a problem of double taxation, and it depends on whether there is a double taxation agreement between Spain and your country of origin.
A double taxation agreement is an agreement between two countries that establishes:
- The rules to determine where you are actually a resident (and therefore which tax rules apply to you)
- The methods to avoid or reduce double taxation, either by exempting some income or by giving credit for taxes paid
Therefore, it is possible that you have to pay taxes twice, but if there is a double taxation agreement between Spain and your country of origin, chances are that you won't.
However, this depends on your specific situation. That's why it is advisable to consult with an expert tax lawyer before moving to Spain as a digital nomad.
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