- Allows non-EU nationals, including UK citizens, to work remotely in Spain and access tax advantages.
- Remote work for non-Spanish companies, a deposit, and private medical insurance are prerequisites for the DNV.
- Accompanies the DNV, offering tax benefits for newcomers, particularly regarding employment and non-employment income taxation.
- Spain taxes income up to €600,000 at 24%, and non-employment income earned outside Spain remains untaxed.
- UK tax residents have specific considerations, mainly concerning UK source income and potential exemptions.
Visa Requirements and Benefits
Spain has introduced a Digital Nomad Visa (DNV) that allows UK and other non-EU nationals to live and work remotely in the country while enjoying tax advantages. This new regulation is expected to attract professionals who can work remotely, and it could also be an attractive option for those planning to retire in Spain soon.
To qualify for the DNV, applicants must work remotely for a company outside the EU/EEA or perform a maximum of 20% of their professional activity for a Spanish company. They must have worked for their current employer for at least three months and have a contract for a year. Applicants must have €25,000 on deposit (plus €9,441 for each family member joining them) and private medical insurance.
Tax Regime and Considerations
Upon obtaining the DNV, one can apply for coverage under the ‘Beckham Law Regime,’ a tax scheme named after the famous footballer David Beckham. This tax regime is accessible for individuals who have not been resident in Spain for the previous five years and are moving to Spain under an employment contract or with a DNV.
Employment income is taxed in Spain at a rate of 24% for income up to €600,000, with a rate of 47% applied to income exceeding this threshold. Under this regime, individuals are considered non-tax residents for the year of relocation and the following five tax years. Non-employment income earned outside Spain is not subject to Spanish income taxes.
For UK tax residents, only UK source income is taxed. Gains from the sale of shares could be exempt from capital gains tax in both countries, and UK dividends may not be taxable in Spain.
Analysis and Recommendations
This new visa and the accompanying tax benefits make Spain an attractive destination for digital nomads and professionals who can work remotely. As with any tax-related decision, seeking advice from a cross-border wealth management firm is advisable to understand the intricacies of Spanish and UK taxation and their interaction.
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What We Think
Spain’s introduction of the Digital Nomad Visa coupled with advantageous tax regimes makes it an enticing destination for remote workers and professionals.
However, navigating the complexities of cross-border taxation demands professional advice from experts specializing in Spanish and UK taxation to ensure sound financial decisions and compliance.