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Digital nomad visa – can you apply and what are the tax benefits?
By Paul Montague, Partner, Blevins Franks
928 433 411 | canaryisles@blevinsfranks.com | www.blevinsfranks.com
Spain’s Digital Nomad Visa is a residence option for non-EU nationals who have not lived in Spain for the previous five years. You must have sufficient income resources and intend to work remotely for non-EU companies. It may also provide tax benefits.
Since the UK left the EU, taking up residence in Spain requires more advance planning, paperwork and patience than before. That said, those who receive sufficient income without having to work are generally still able to obtain residence permits and enjoy their retirement years in Spain. It is, however, harder for UK nationals to obtain a work visa in Spain, so the introduction of the Digital Nomad Visa (DNV) was very welcome.
While the DNV doesn’t help individuals wanting to work for a Spanish company, it is an opportunity for people who have the freedom to work online and meet the work requirements. Besides younger digital nomads who enjoy moving from country to country, this visa may also enable you to move to Spain a few years before retirement, if your employment allows you to work remotely.
And besides all the lifestyle benefits that come from living in Spain, having a Digital Nomad Visa can also provide interesting tax advantages.
Work requirements
There are, however, some restrictions on who can obtain a Digital Nomad Visa.
Besides being able to prove you can fulfil your work duties in Spain with just a laptop, phone and internet connection, you must have a suitable qualification or three years’ work experience. You can however work in any type of business, in many roles, and be either employed, self-employed or an entrepreneur.
If you are employed, the company you work for must be outside Spain and established for at least one year. If self-employed, your contracts must have been agreed at least three months before application.
Entrepreneurs intending to initiate, develop or direct an economic activity need confirmation from ENISA (Spain’s funding agency for startups and SMEs).
Application requirements
As with Spain’s other residence visas, you need to prove a minimum level of income – €30,240 for individuals and €41,580 for couples (as at 2023). It can be a combination of earnings, investment income and savings.
You must have a qualifying medical health insurance and a recent authorised medical record check, plus supply UK and Spanish criminal record checks no more than 90 days old.
Various other paperwork will be submitted with your application, such as proof of residence, passport, birth and marriage certificates etc.
If you are already legally resident in Spain, you can apply locally and receive a three-year Digital Nomad Residency Permit (DNRP). This can later be renewed for three years. UK residents apply via the Spanish Consulate in London, Manchester or Edinburgh and receive a 12-month Digital Nomad Visa. Once this expires you can apply for a two-year DNRP. After five years, you can apply for permanent residency.
Tax benefits
Having a Digital Nomad Visa can provide tax advantages. Provided you are employed or an entrepreneur you can apply to be taxed under the more beneficial special inpatriate tax regime (commonly known as the ‘Beckham regime’). It is not available to self-employed people.
Once you have this status, income up to €600,000 will be taxed at a preferential rate of 24%. Any excess is taxed at 47% (normally applied on income half this amount). You will have to pay Spanish social security.
If you dispose of any assets outside Spain, including company shares, you will not have to pay any Spanish capital gains tax. You will also not be liable to Spanish Wealth Tax on non-Spanish assets during the period.
And, provided you remain non-UK resident (as determined by the Statutory Residence Test) you will not have to pay UK tax on your earnings either.
Note that these tax benefits are not automatic; once you have your DNV you need to apply for this inpatriate regime. The tax benefits can then be extended to cover your spouse, provided they meet the conditions.
As always, you should get personalised advice to establish how these relatively new rules would apply to your circumstances. Contact an immigration specialist to learn more about the Digital Nomad Visa. For the tax elements, it is recommended that you speak to a cross-border wealth management specialist, so they can confirm what tax would be due in Spain and the UK and how you can take full advantage of the rules in both countries.
Blevins Franks specialises in providing cross-border integrated advice covering residence, taxation, pensions, estate planning and investments. All our recommendations are based on your specific circumstances and objectives.
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.
Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.
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