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TAXES

Do I have to register and pay taxes in Spain if I’m a remote worker?

With the rise of remote working, many foreigners are looking to move to Spain whilst holding on to their jobs back home. But do you have to register and pay taxes in Spain if you're working here remotely? Here's everything you need to know.

home working
Do you have to pay taxes if you work remotely from Spain? Photo: Firmbee / Pixabay

Picture this – your company has decided that you no longer need to go back to the office after the Covid-19 pandemic and you can continue to work remotely from wherever you want, perhaps from another country.

You may decide to move to Spain, attracted by its good weather, great food, lower cost of living and many other perks, including the fact that already having a job resolves one of the major obstacles of living in the country.

However, this is where it gets complicated and you start asking questions – do you have to register and pay tax in Spain if you’re working remotely and is tax already deducted from your salary in the country where you previously lived and worked?

Many people are confused by this and online forums are filled with comments claiming that they don’t need to pay tax because they’re not working for a Spanish company or don’t have any Spanish clients.

So do remote workers whose work has nothing to do with Spain have to pay tax in Spain?

In short, the answer is yes. If you live in Spain for more than 183 days, you must pay tax here. Regardless of where your company or clients are based, if you are physically living in Spain and working from here, you are liable to pay tax.

On their website, the Spanish government states that if you’re resident in Spain you “must pay tax in Spain on your worldwide income, i.e. you must declare in Spain income obtained in any part of the world”.

But what if I’m already taxed on my salary back in my home country?

If you have a permanent remote job, you may already be paying tax on your salary back in your home country. Technically though, if you no longer live in that country, you shouldn’t be paying tax there. You should really only be paying tax in Spain if you decide to move here.

While Spain does have double taxation agreements with several countries, including a treaty for the avoidance of double taxation with the UK and the US, you are still expected to declare your income in Spain.

How do I register legally as a remote worker in Spain?

As Spain’s digital nomad visa is still not up and running yet, and all the details of how this will work haven’t been released by the Spanish government, there are currently limited options of how to legally register and pay taxes as a remote worker in Spain.

Below we outline the options for EU and non-EU citizens.

EU citizen

If you’re an EU citizen, you can simply move to Spain without the need for a visa. However, you will need to register your residency here within the first three months. One of the easiest ways of declaring the income you earn from your remote job is to register as self-employed or autónomo.

Ideally, your company would stop paying you a salary with the tax already deducted and you would simply invoice your company every month for your wage. You would then be responsible for declaring and paying your own taxes.

As an autónomo, you will declare and pay your taxes every three months. You will then also have to submit an annual tax declaration in June each year.

You should be aware that as an autónomo in Spain you will more than likely pay more taxes on your remote income than you did back in your home country. This is partly because of the higher social security fees you will be charged, regardless of how much you earn. Currently, it’s €294 per month (€60 for the first year and working progressively up to €294 over the course of the second year).

The income tax bands also mean that you may end up paying more personal income tax in Spain as well, particularly if you are a low to mid-earner. 

READ ALSO – Self-employed in Spain: What you should know about being ‘autónomo’

Of course, not all companies are happy to do this, so you will need to speak with them and see what your options are. You should also talk to a gestor or tax advisor in Spain for your particular situation to see if there is another option of declaring your income here.

This could include creating a subsidiary company here and being paid a salary from that company, or finding an international accounting company that could arrange for you to be paid as a Spanish employee. Again, thess options are not necessarily available to most remote workers.

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

Non-EU citizen

If you’re from a non-EU country, you first have the challenge of getting a visa to legally be allowed to live in Spain for longer than 90 days, even before you start thinking about how to register as a remote worker and if you need to pay tax on your income.

Unfortunately, there’s currently no visa that allows you to simply move to Spain and work remotely. As mentioned above, Spain’s digital nomad visa is still not in operation yet. Here’s everything we know about it so far.

For a working visa, you have to be offered a job in Spain and be sponsored by a company that can prove that the job can’t be filled by someone else in the EU. For an entrepreneur visa you have to set up a business in Spain with an economic interest for the country and with a student visa, you’re only allowed to work 20 hours a week.

READ ALSO – Worker, retiree or investor: What type of Spanish visa do I need?

One option is the Golden Visa, which will allow you to work in Spain and register as an autónomo like above, but the catch is that you’ll have to have a spare €500,000 to spend on a property here before you can.

Many people mistakenly believe that they can work remotely on the Non-Lucrative Visa or NVL, however as the name suggests you can’t work on this visa. As mentioned above, the Spanish government says that you have to declare tax on your worldwide income, so if you continue to work for your company or clients abroad during this time and get found out, you could incur hefty fines.

Particularly since the start of the Covid-19 pandemic and the rise in remote workers, Spanish consulates have been rejecting NVL applications from anyone they believe might be trying to continue working remotely while they’re here.

If you don’t have €500,000, one of the best options is to apply for the NVL and take a sabbatical from your job for a year or quit your job when you move here.

Then after the year is up, you can exchange your visa for a different residency permit that allows you to become self-employed (autónomo). You can then start working remotely for your company again if you’ve been on sabbatical or apply for a new remote job and start working and declaring your taxes legally in Spain. 

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For members

WORKING IN SPAIN

How to understand your payslip in Spain

If you’re an employee for a company in Spain, each month you should receive a payslip from your employer, detailing how much you earn, deductions and plenty more. Here's how to read and understand your Spanish payslip properly.

How to understand your payslip in Spain

It can sometimes be confusing working for a company in another country. Even if you work in English, your payslip, or nómina as it’s called here, can be hard to understand.  

According to the salary platform EMT, more than 50 percent of people in Spain don’t know how to read everything on their payslip and don’t fully understand all the numbers on there.

It’s important to be able to understand everything about the amount you’re getting paid and what’s being deducted from that amount each month so that you can stay on top of your finances. Read on for our handy guide to help you out. 

There are essentially three sections to your payslip, which include the header, the middle section detailing your earnings and deductions and the footer, where you’ll see the rates applied for your calculations.

Here’s an example of what a nómina or Spanish payslip usually looks like. 

Header

According to Spanish law, each payslip must have a header that identifies both the worker and the company. It should include:

Information about the company
Name of the company
Registered office of the company
Tax Identification Code (NIF)
Social Security Registration number

Information about you (the employee)
Full name
Your DNI, NIE or TIE
Your social security number
Position with the company
Professional group
Seniority level
Date you started working for the company

Middle section 

Settlement period or Periodo de liquidación
A payslip is in fact similar to an invoice, so it should include a settlement period where it states the number of days worked for the payment being received. This is typically one month or 30 working days.

Revenues and expenses/accruals or Devengos
The revenues and expenses part of your payslip will state the gross amount of income that you have earned for a particular period worked. It will include your base salary, as well as bonuses and extra non-salary payments that are not taxed as part of your salary. These include compensation or payments for redundancy and must not exceed 30 percent of your salary payments.

Base salary or Salario base
Your base salary is the minimum amount you get each month. This will be at least €1,000 which is the minimum wage or SMI set for 2022, if you are working a full day of at least 40 hours per week.

This section will also include:

Supplements or Plus Convenio
This will detail any extra amounts received in relation to your work, such as extra shifts covered, working overtime and payments for extra training.

Extraordinary bonuses or Gratificaciones extraordinarias
If you work in sales, you may regularly get bonuses, but you may also get extra ones at Christmas for example. You may actually receive 14 payments but will receive them 12 times a year or once per month.

Remuneration
This part refers to extra payments to which income tax can be applied such as payments for private medical insurance, petrol for a company car or restaurant coupons to use when you’re working away.

Expenses
This refers the expenses you have incurred in order to carry out your job. It could be the cost of material or transportation if these have previously been agreed upon with your employer.

Social security and benefits or Prestaciones e indemnizaciones de la Seguridad Social
There may also be added benefits for suspensions or dismissals, as well as expenses assumed by the company, such as disability or unemployment benefits.

At the end of all of this, with everything added together, you will see your total gross salary. It’s important to remember though that this isn’t the amount you will get in your bank account each month as there will be several deductions to take into account first.

Deductions or Deducciones

This section of your payslip includes all amounts taken away from your total gross salary in relation to income tax and social security payments. These will include:

Social security or Seguridad Social

Your social security covers for healthcare, sick pay, accidents at work, maternity or paternity pay or temporary disability, and although your employer pays this, you will be responsible for paying 4.70 percent, which will be taken away from your total.

Unemployment or Desempleo
This is the amount that will cover you for potential unemployment or redundancy should the situation arise and varies according to the type of contract you have. It could be anything from 1.55 percent for a fixed-term contract to 1.60 percent for a full-time contract.

Overtime due to force majeure or Horas extraordinarias por fuerza mayor
This will include any extra hours that you worked involuntarily.

Overtime without force majeure or Horas extraordinarias sin fuerza mayor
These are the extra hours you worked voluntarily and can incur withholdings up to 4.7 percent.

Personal income tax or Impuesto sobre la renta de la personas físicas

Your income tax or IRPF will also be taken away from your total gross salary before it appears in your bank account. The percentage that you are charged will vary depending on how much you earn as well as your personal situation, your family (including if you’re married and have children) and the type of contract you have.

Salary advances or Salario Anticipo
If you are allowed to get any advances on your salary, this will also be reflected in your payslip and deducted here.

Value of products you received
This refers to the products and services you may get from your company received as wages, which are also subject to income tax.  

Other deductions
Other deductions on your income tax may include union payments or loan repayments for example.

After all of this is calculated, you will be able to know the actual amount that you should finally receive. If you need to question anything, you can refer to the footer section, which will state the specific rates applied for your calculations

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