Digital nomad in 2024: what are the tax advantages and disadvantages in Spain?
Spain has been the choice of many digital nomads, both to spend a short stay and to make it their home, even on a regular basis.
Whether it's the Mediterranean climate or the economic growth Spain has experienced in recent years, the fact is that Spain is one of the most sought-after European countries for foreigners.
With this large influx of immigrants, Spain created the digital nomad visa after the COVID-19 pandemic, and approved the new Startups Law in 2023, which amended some provisions of the Beckham Law, making it more accessible.
I commented on the changes to the Beckham Law in this article.
Before commenting on the tax benefit granted by the Beckham Law, it is worth explaining how the payment of the Impuesto Sobre la Renta de Las Personas Fisicas – IRPF.
“Impuesto sobre la Renta de Las Personas Físicas” – Spanish Income Tax
Like most countries around the world, Spain requires income tax for individuals. Spaniards generally declare their income using the so-called "Modelo 130", which is nothing more than a document submitted to the Spanish tax authority containing information about the income earned that year.
The Spanish tax authorities analyze how that income will be taxed and at what rate.
To do this, they use the following table (updated until 2023):
Annual Income | Rate |
De 0€ até 12.450€ | 19% |
De 12.450€ até 20.2000€ | 24% |
De 20.200€ até 35.200€ | 30% |
De 35.200€ até 60.000€ | 37% |
De 60.000€ até 300.000€ | 45% |
Mais de 300.000€ | 47% |
Those considered by Spanish law to be tax residents in Spain have the duty to declare the “Impuesto Sobre La Renta De Las Personas Físicas” annually, universally and progressively.
In other words, they must declare all their income.
It is important to remember that anyone who stays in Spanish territory for more than 183 days will automatically be considered a tax resident in Spain.
However, there is a tax regime that Spain grants, through the Beckham Law, which disqualifies the individual as an ordinary tax resident, placing them in a sui generis category, even if they stay for more than 183 days in Spain.
Finally, we will go into the Beckham Law with the main changes to the Startups Law.
What is Beckham's Law?
The Beckham Law was introduced in 2005 by Royal Decree 687/2005 with the aim of attracting skilled foreign labor to Spain.
Those who fall under this regime will be able to stay in Spain for a further 183 days without being considered ordinary tax residents, unlike other Spanish taxpayers. In other words, they will not have to declare their income universally.
In addition to not having to declare universally, you will only pay tax on income earned within Spain at a flat rate of 24% or 47%.
However, there are a number of requirements to fall under the Beckham Law, such as:
a) you must not have resided in Spain for the last 5 years;
b) employees who come to Spain to work for a Spanish company or who have an employment contract with a foreign company; or
c) self-employed persons who can prove that they intend to open a business in Spain; or
c) who is a high-income expatriate holding managerial positions in a Spanish company or;
d) who is an administrator immigrating to Spain to work for a Spanish company or who is an administrator of a start-up.
Those who fall under this regime can benefit from it for up to 5 years.
However, it is important to remember that, despite falling under this regime, the individual will remain tax resident in their country of origin.
An important note: the granting of a digital nomad visa has nothing to do with falling under the Beckham Act tax regime. It is possible to have a digital nomad visa and file the IRPF tax return like other Spanish taxpayers and apply the progressive rate of the IRPF table.
If you are interested in hiring professional legal services related to tax planning for your change of tax residence to Spain, we are a law firm specializing in the subject.
All you need to do is contact us via WhatsApp or email: thyanipuppio@gmail.com
Tax residency alert
Even if they fall under Beckham's Law, they do not leave their country of origin. In other words, they will remain tax resident in their country of origin.
The mistake many people make, mainly because they are unfamiliar with tax legislation, is to declare in their country of origin only the income earned in their country of origin, and to declare in Spain only the income earned in Spain.
However, what many people don't know is that this is not just a mistake, it is a crime of tax evasion.
The big headache of having a criminal conviction is a criminal record. If you have a criminal record, your passport will be invalidated. They won't be able to leave the country.
In addition, Spain requires you to present a valid passport in order to obtain a digital nomad visa. In other words, no valid passport, no visa.
What's more, in addition to a possible criminal conviction, the tax authorities could demand the amounts evaded retroactively, plus interest and monetary correction.
It is therefore extremely important to carry out tax planning, because in addition to optimizing tax payments, it avoids various problems, such as tax evasion and double taxation.
If you are interested in hiring professional legal services to carry out tax planning, we are a law firm specializing in the subject.
To do so, please contact us via WhatsApp or by e-mail: thyanipuppio@gmail.com
