In today’s digital age, being a digital nomad is an increasingly popular way of life. The ability to work from anywhere in the world is an undeniable advantage, but it also comes with tax responsibilities that should not be overlooked. In this article, we will explain in detail the taxes in Spain for digital nomads and how you can optimize your finances while complying with all the tax regulations of the country.
What does digital nomad mean?
A digital nomad is a person who uses electronic devices, such as a computer, and the internet to perform their work while traveling the world.
It can also be referred to as a remote worker who temporarily changes their residence.
How many types of digital nomads exist today?
Currently, there are three types of digital nomads:
- Entrepreneurs: They have an online business that generates income through the sale of digital products.
- Freelancers: They work independently and generate income by offering their services to various clients.
- Employees: They work for a company with a fixed salary.
How to know if you have to pay taxes in Spain as a digital nomad?
The first thing you should know is that if you reside in Spain for a period of 183 days, you are considered a tax resident and therefore you will have to pay taxes in Spain.
If you spend less than 6 months in Spain but your source of income is located in Spain (this refers to business or employment activities), or if your children reside in Spain, you will also have to pay taxes.
It may happen that a person with a digital nomad visa living in Spain can become a non-resident for tax purposes as they can opt for the Beckham Law.
What taxes do you have to pay if you are a digital nomad in Spain?
As a tax resident, you will pay the same taxes as self-employed individuals. You will also need to register with the Tax Office and Social Security and file VAT and Personal Income Tax (IRPF) returns.
- Personal Income Tax (IRPF): This tax must be paid by all digital nomads living in Spain for a period of 183 days. The rate may vary depending on income, which can reach up to 45% if income exceeds €60,000 per year.
- Value Added Tax (VAT): If you are a digital nomad who sells products or services, you must file VAT returns if your income exceeds €10,000 per year. The VAT rate in Spain is 21%.
- Corporate Tax: If you are a digital nomad with a company in Spain, you will have to pay corporate tax. The corporate tax rate is 25% for companies.
Tax that digital nomads who do NOT reside in Spain must pay
Digital nomads who are considered non-residents for tax purposes must pay a tax rate of 24% on the income they earn in Spain (not on worldwide income) up to €600,000 (instead of having a rate of 50%).
For other types of income, the tax rate will be 47%.
There is also a tax rate that applies to capital gains. This tax rate applies in cases of sale of stocks, properties, interests, and stakes.
If these cases occur, the tax for digital nomads will be:
- 19% up to €6,000
- 21% from €6,001 to €50,000
- 23% from €50,001 to €200,000
- 27% from €200,001 to €300,000
- 28% from €300,001 onwards.
How does the Beckham Law work for digital nomads?
The Beckham Law is a special tax regime whereby you can be considered a non-tax resident even if you have been in Spain for the required 183 days.
If you are considered a non-tax resident, you benefit from the advantage that the income tax rate is lower and you do not have to pay or declare other taxes.
To be eligible for the Beckham Law, you must meet an essential requirement: you cannot have resided in Spain for the last 5 years, and the reason you come to Spain is for employment.
If a digital nomad pays taxes in Spain, do they have to pay them in their country of origin?
It’s very common to ask this question, and the answer to this question is «it depends,» as there are double taxation treaties. Double taxation treaties are agreements that Spain has with other countries so that people who pay their taxes in Spain do not have to pay them again in their country of origin. This means that if Spain has a double taxation treaty with your country of origin, you will only have to pay taxes in Spain.
But our recommendation is that you consult your case with a tax specialist lawyer who can advise you and tell you how and where you have to pay your taxes.
Marta Palacios Cuesta is the founder and principal consultant of Es Abogado Extranjería, a law firm specializing in immigration law in Madrid and Seville. With an impressive academic background, Marta offers expert advice on immigration procedures, residency processes and obtaining Spanish nationality. Committed to providing personalized and up-to-date solutions, her firm stands out for its detailed and professional approach. If you need legal guidance regarding your status in Spain, contact Marta for a personalized consultation at Es Abogado Extranjería.
