Spain’s Digital Nomad Visa and tax benefits

To qualify for a Digital Nomad Visa (DNV), you must meet certain criteria. In particular, you must work remotely for a company outside the EU/EEA (or perform a maximum 20% of your professional activity for a Spanish company), have worked for them for three months with a year’s contract.

You need €25,000 on deposit (plus €9,441 for each family member joining you) and private medical insurance.

It is also possible to obtain a visa as an entrepreneur in Spain if you meet the conditions.

Beckham Law beneficial tax regime

You can then apply to be covered by the attractive ‘Beckham Law Regime’. You are eligible if you have not been resident in Spain for the previous five years and are moving to Spain under an employment contract; with a Digital Nomad Visa, or as a director of an entity if you hold less than 25% of its capital.

If approved you are considered non-tax resident for the year of relocation and following five tax years. While your employment income is taxed in Spain, the rate for income up to €600,000 is 24%. After that it’s 47% (normally applying to income over €300,000). Non-employment income earned outside Spain is not subject to Spanish incomes taxes.

UK taxation

Employment income – if you are non-UK tax resident, only UK source income is taxed there.

Capital gains – while living in Spain under the DNV, gains made on the sale of shares could potentially be free of capital gains tax in both countries.

Dividends – if the disregarded income treatment applies the UK tax liability is highly reduced or nil. UK dividends are not taxable in Spain.

This new visa appeals to digital nomads who fancy living in Spain for a few years, and to UK professionals and businesspeople planning to retire in the coming years. If you are on a high UK salary and can work remotely, you could potentially move to Spain under the DNV and pay less income tax. Disposing of UK company shares while living in Spain under this visa would save you tax.

Seek advice from a cross-border wealth management firm who understands the intricacies of Spanish and UK taxation and interaction between them.

Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.

Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com