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What should you know about taxes for digital nomads in Spain?
With the rise of remote work, Spain has become an attractive destination for digital nomads thanks to its climate, quality of life, and fast internet connections. However, before settling down, it’s crucial to understand how taxes work for this group, especially if you plan to apply for the digital nomad visa.
Digital Nomad Visa: How does it affect your tax obligations?
The Digital Nomad Visa, allows remote workers from outside the EU to legally reside in Spain while working for foreign companies.
- Visa duration: This visa is initially valid for 1 year and can be renewed for up to 5 years.
- Tax obligations: Visa holders must pay attention to their tax status, as their length of stay in Spain may classify them as tax residents.
Tax residency: When does it apply?
Your tax residency status in Spain depends on the number of days you spend in the country:
- If you stay in Spain for more than 183 days in a year, you will be considered a tax resident.
- As a tax resident, you are required to report and pay taxes on your worldwide income, including income earned outside Spain.
Income tax in Spain for digital nomads
Income tax (IRPF) in Spain is progressive and varies depending on your income level:
- For non-tax residents: Only income earned in Spain is taxed, at a flat rate of 24%.
- For tax residents: The tax rate ranges from 19% to 47%, depending on annual income.
Tax benefits under the Beckham Law
The Special Regime for Inbound Workers, known as the Beckham Law, is an attractive option for digital nomads. This regime allows you to:
- Pay a flat tax rate of 24% on the first €600,000 of annual income.
- Benefit from this tax advantage for up to 6 years.
To apply for this regime, you must submit your application within 6 months of obtaining your visa or residency permit.
Tips for managing your taxes as a digital nomad
- Consult with a tax advisor: Spanish tax laws can be complex and vary depending on your personal situation.
- Keep detailed records: Track your income, expenses, and entry and exit dates from Spain.
- Check for double taxation: Verify if your home country has a treaty with Spain to avoid double taxation.
- Plan your tax residency: Consider limiting your stay in Spain to less than 183 days per year to avoid being classified as a tax resident.