Spain’s Digital Nomad Visa and tax benefits

You may be able to move to Spain earlier than expected and not have to wait until retirement. The new Digital Nomad Visa enables UK and other nonEU nationals to live and work remotely in Spain, plus provide tax advantages.

The Digital Nomad Visa (DNV) is a key component of Spain’s ‘Start Up Law’. Approved in December, its main objective is to attract and retain investment and talent in Spain.

To qualify for a DNV, you must meet certain criteria, including:

• You work remotely (online) for a company located outside the EU/EEA or perform a maximum 20% of your professional activity for a Spanish based company.

• You have been working for the company for three months and your contract is for one year minimum.

• A clean criminal record.

By Brett Hanson, Senior Partner,

• Proof you have €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.

Once approved for this visa your spouse and dependent children can live in Spain with you.

When applying at the Spanish

Consulate in your home country, the visa is initially valid for one year. You then apply for another three years. If you apply directly in Spain as a tourist, the visa covers three years.

Beckham Law beneficial tax regime

Once you are in possession of a DNV, you can apply to be covered by the ‘Beckham Law Regime’. This tax regime has been modified to make it even more attractive.

• 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% (which normally applies to income over €300,000). Non-employment income earned outside Spain is not subject to Spanish incomes taxes.

• Your solidarity tax liability will only be on assets located in Spain (and the allowances are very high).

You can apply to be taxed under this regime 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.

Entrepreneurs and self-employed individuals are not eligible.

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 Digital Nomad Visa, 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 maybe nil. Dividends received from UK companies are not taxable in Spain.

This new visa obviously appeals to digital nomads who fancy living in Spain for a few years. But it is attractive to UK professionals and businesspeople planning to retire in the coming years. If you are on a high UK salary can work remotely, you may be able to move to Spain under the DNV and pay less income tax under the Beckham regime. Dispose 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.

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.

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