09/02/22

CITIZENSHIP AND RESIDENCY: Spain to lure expat workers with latest visa proposal.

​As published on international-adviser.com, Wednesday 9 February, 2022.

Spain is looking to introduce a visa that will allow foreign remote workers to operate from the country without needing to obtain a full work visa.

Under the recently introduced ‘Startup Act’, the ‘digital nomad’ visa can be used by people from outside the EEA who work remotely for non-Spanish companies.

If they are freelancers, then the requirement is that they can only earn up to 20% of their income from Spanish companies.

Workers can use the visa for one year and then be able to renew it for an additional two.

The legislation which includes the digital nomad visa is currently under consideration by the Spanish parliament, so there is no guarantee if it will be introduced.

Jason Porter, director at Blevins Franks, told International Adviser he is not surprised “Spain has taken this route” considering how many Brits have holiday homes in the country and how the pandemic has shifted the way people work.

“People who wanted to work remotely post-Brexit typically used the Spanish non-lucrative visa, but we had heard from a number of immigration advisers over the past six-to-12 months that the consulate had been instructed to reject applications made on this basis,” he added. “This could have been because they were planning to introduce a visa specific to this space.”

But Porter warned that tax residency rules will still apply, and workers should keep that in mind.

“Whilst the 24% tax rate attached to the digital nomad visa appears interesting, this seems to only apply for the first 183 days the visa holder is in Spain. Those wishing to take advantage of the new visa will very much need to be cognisant of the tax rules to know when to register as a tax resident.

“It is important to remember that if you spend 183 days or more a year in Spain, then you will be a Spanish tax resident and as such must potentially pay taxes there on all of your income, including that generated abroad.”

Tim Govaerts, associate director at Blacktower Financial Management in the Costa Del Sol, told IA: “Brexit has further triggered the need for a specific visa to attract these, usually, high earners. Those Brits who did not manage to get a residence permit or foreigner identity card (TIE) before the end of 2020 and want to work in or from Spain now have to apply for a visa.

“There are different types of Spanish work visas and the application process to obtain one usually takes place at a Spanish embassy or consulate and often stringent criteria needs to be met; a business plan and process that can take many months.

“The new visa should make this process much quicker and the criteria easier to meet. As we understand it, the new visa has been created for foreign employees from outside the EEA, for example Brits, who are either employed by non-Spanish companies or freelancers whose earnings from Spanish companies cannot exceed 20% of their income and will be valid for one year after which it can be renewed for up to two years if the criteria are still met.

“I believe it will be a perfect option for example for those Brits that just missed the deadline in 2020 to obtain the necessary residence permits and who can work remotely, whether employed by a company in their home country, or self-employed with mainly non-Spanish clients.”

Govaerts added that the Canary Islands may become one of the more popular destinations for digital nomad visa holders.

“Events such as the Repeople conferences in Gran Canaria and networks such as Work&Play in Tenerife heavily promote the criteria that digital nomads tend to look for, and that the Canaries can offer them: sunny weather, cheap cost of living, and facilities such as high speed internet and coworking places,” he said.

“Digital nomads usually want to obtain a better work-life balance, something the Canaries and other Spanish destinations can offer; a client of mine in Lanzarote works behind his laptop until 5pm and then runs off to the beach to start his surf lesson at 5.30pm.

“It is not a new phenomenon, people have been looking for years in ways to find a better work-life balance, however, I believe that the pandemic has increased the demand, as remote working has become far more widespread since almost everyone who works behind a screen has had to work remotely at some stage over the past two years.”