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WORKING IN SPAIN

Spain passes startups and digital nomad law

The Spanish Parliament has given the green light to a new startups law which will bring tax benefits and other perks to entrepreneurs, remote workers and digital nomads who want to live and work in Spain. 

spain startups law economic affairs minister nadia calvino
Spain's Economic Affairs Minister Nadia Calviño says the new startups law will put Spain at the forefront of the current global digital transformation. (Photo by Michal Cizek / AFP)

It’s been in the pipeline for 16 months, but on Thursday evening Spain’s Parliament finally approved its highly anticipated startups law, or Ley de Startups.

The legislation had already been greenlighted by Spain’s Commission for Economic Affairs and Digital Transformation, which made 271 amendments to the initial draft bill, as well as the Spanish Council of Ministers.

Its approval in the Spanish Parliament is a crucial step for the law to come into force, which is expected to be in January 2023, once the Senate has processed its parliamentary implementation.

The law was given the thumbs up in the Spanish parliament by 177 MPs, with 75 abstentions (by far-right party Vox and Catalan parties Junts and ERC) and 88 votes against (mostly from MPs belonging the right-wing PP who called for the law to be more far reaching).

This majority is expected to guarantee the legislation is ratified without trouble in the Senate in the coming weeks.

READ MORE:  When will Spain’s startups law actually come into force?

“It’s one of the most enjoyable moments I’ve experienced in the Parliament,” joked Economic Affairs Minister Nadia Calviño about the support the “pioneering” legislation has received from across the country’s political spectrum.

“It’s a law that will allow Spain to be at the forefront in the push and promotion of talent in this rapidly growing digital economy”.

Spain already attracts many foreigners from around the world thanks to its great climate and famed quality of life, but up until now it hasn’t been legally possible for many remote workers or digital nomads to work here without the correct visa or complex paperwork.

In 2015, Spain ranked among the worst OECD countries to start a business in, so the hopes are that the new law will change this reputation. 

The startups law will be open to anyone from the EU or third countries, as long as they haven’t been a resident in Spain in the previous five years, and it will allow workers to gain access to a special visa which can be renewed for up to five years. 

EXPLAINED: 15 things you need to know about Spain’s new law for startups and digital nomads

It will give startups and investors a reduction in Corporation Tax from 25 to 15 percent during the first four years and will also allow digital nomads and other remote workers to pay Non-Residents Tax (IRNR) than the regular income tax Spanish residents pay (IRPF), and at a reduced rate of 15 percent rather than 25 percent. 

The law also includes a new visa that will allow digital nomads to stay and work in Spain for a period of one year. Once it has expired, they will be able to extend it by requesting a residence authorisation as a remote worker for a further two years and then extend it again, up to five years.

What hasn’t been confirmed yet are the exact conditions and requirements digital nomads will have to meet, such as the minimum amount they’ll have to earn or the type of qualifications they might have to have. 

Some experts believe that the government will set this at around €2,000 per month.

It’s also not clear yet whether digital nomads will have to pay social security and be eligible for state health care or if they’ll have to get private health insurance to meet the requirements for the visa.

READ ALSO: Everything there is to know about Spain’s new digital nomad visa

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WORKING IN SPAIN

Your questions answered about Spain’s digital nomad visa

Spain's long-awaited digital nomad visa is finally available, but there is still much confusion about it, so we've answered all your burning questions.

Your questions answered about Spain's digital nomad visa

Spain’s Startups Law, which also introduced a new digital nomad visa, was approved at the end of 2022, but didn’t come into force until January 2023 and all the details are only just now being revealed. 

From how much money you need to your tax obligations and if you can bring family, members, here are all your questions answered. 

What are the financial requirements to apply for the visa?

You must prove that you earn 200 percent of the SMI or Minimum Interprofessional Salary. The current minimum wage in Spain is €1,000 per month (across 14 payments) or €1,166.67 across 12 payments.

Keep in mind though that the minimum wage is currently being re-evaluated and is likely to go up to €1,082 (across 14 payments) per month in the near future.

This means that currently, you must be able to show that you will have an income of at least €2,333.34 per month or €28,000 per year, but it is likely this will increase. You can prove this amount either with job contracts, invoices or bank statements.

Can I bring family members with me on the visa?

Yes, you are permitted to bring partners and children with you to Spain on the digital nomad visa.

In order to add a family member, however, you must prove that you have an extra 75 percent of the SMI or minimum wage. This currently equates to an extra €875. For each additional family member after this, such as children, you will have to prove you have an extra 25 percent of the SMI, currently €291.66.

READ ALSO: Ten of the best cities for digital nomads to move to in Spain

Do I need private health care?

You must also make sure that you have either private or public health insurance, simply getting travel insurance with health coverage is not enough.

The Spanish government mentions the option of getting public health insurance instead of private cover, but it is not yet clear whether this means that you will have to contribute to the social security system or be eligible for the convenio especial – the public pay-in scheme.

Do I have to have any professional qualifications? 

You must prove that you either have professional qualifications or a degree relating to your job or that you have at least 3 years’ experience working in your field. 

How long is the visa valid for?

The visa will be valid for an initial period of one year, however, it can be renewed for up to five years. After that, if you want to continue living in Spain, you will be able to apply for permanent residency.

Does the visa give me access to travel around the EU?

Yes, once you have your visa and you’re in Spain, you will be able to apply for a residency card. This will allow you to travel throughout the EU during the time that you’re living in Spain.

Keep in mind though, it won’t give you the right to work or live in other EU countries, but you will be able to go for short breaks. 

How long do I have to stay in Spain for the visa to be valid?

Many digital nomads choose to split their time between different countries. If this is your case, and you want to split your time between back home in the US or the UK for example, you must make sure you stay in Spain for a maximum of 6 months per year for your visa to remain valid.

Do I have to pay tax in Spain?

Yes. If you stay longer than 183 days, then you will be considered a tax resident in Spain. This means that any money you earn while working in Spain, even if it comes from clients or companies abroad will be taxable.

However, the digital nomad visa grants you tax benefits, such as being able to pay the Non-Residents Tax Rate (IRNR) rather than the regular progressive income tax (IRPF) that Spain’s resident workers pay.

Non-Resident Tax was previously only applicable to non-residents such as second-home owners, but an exception has been made for digital nomad visa holders even if they spend more than 183 days a year in Spain and are therefore technically fiscal residents.

IRNR is generally 24 percent in Spain but this will be reduced to 15 percent for digital nomads and remote workers, as long as you earn below €600,000 a year.

This favourable tax rate will be available for four years, if you choose to renew your visa. 

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