Is Spain's digital nomad visa still worth it?
There’s growing evidence that the Beckham Law tax benefits promised to digital nomads and remote workers who’ve moved to Spain this year under the new Startups Law have not materialised. Should foreigners still bother to apply for it?
Spain’s Startups Law, in force for around ten months now, generated an incredible amount of interest from overseas when it was first announced.
The core objective was to make Spain an easier and appealing destination for foreign talent, with numerous incentives and even a visa for non-EU digital nomads.
Of all these perks, the promise that digital nomads and remote workers would be eligible to pay non-resident income tax (IRNR) on their earnings rather than regular income tax (IRPF) was the key driving force for many who had previously feared Spain’s traditionally high fiscal burden.
After all, this was the difference between paying just 24 percent income tax on earnings of up €600,000 a year, or already paying 30 percent income tax from €20,200 in gross yearly earnings (the standard progressive IRPF income tax goes up to 47 percent from €300,000).
This favourable tax rate for internationals is nicknamed the Beckham Law. It’s been in place since 2004 and was initially available to inpatriate workers who were relocated to Spain, and in 2023 it was supposedly extended to other types of foreign remote workers benefiting from the Startups Law.
However, it has become increasingly clear over the course of the year that this hasn’t happened.
In October, The Local Spain spoke to readers and lawyers who explained how Spain’s new digital nomads were still waiting for their promised low tax rate, and having to pay standard IRPF income tax as a result.
Numerous other law firms have told the Spanish press that Spain’s tax body Hacienda appears to have scrapped the Beckham Law in 2023.
"From the moment they register with Social Security, they have six months to benefit from this (Beckham Law) tax regime, and normally within a period of one or two months they are informed their request has been favourable,” Almudena Medina, partner and tax lawyer at Madrid law firm Ceca Magán, told El Economista.
“However, the Spanish Administration currently tells them (digital nomads and remote workers) that they are waiting for the regulatory instructions to decide on their cases.
“These taxpayers and their employers need to know what withholding tax should be applied to them, they cannot be in limbo and even less so with a view to the annual tax declaration in June 2024," says Medina.
READ ALSO: Is Portugal's 'anti-digital nomad' stance a sign of what's to come in Spain?
It may be too early to suggest that Spanish authorities have decided to get rid of the Beckham Law tax regime completely, but it certainly seems like they have lacked foresight when promising fiscal benefits they don’t know how or if they want to implement, yet.
This is the biggest anti-climax for budding and existing Spanish digital nomad visa applicants, but other shortcomings have also emerged.
Many applicants have been coming up against lots of bureaucratic setbacks and obstacles, spending thousands on lawyer fees, taking weeks to gather documentation and getting it all translated.
READ MORE: The problems Spain's digital nomad visa applicants face
Even those who enlist the help of a law firm to process Spain’s digital nomad visa are not guaranteed they will have it approved.
Whether it’s due to the nature of their work not coinciding with the specifications of the new Startups Law or problems with the lack of social security exchange between Spain and other countries, the process to obtain the so-called DNV haven’t been as straightforward as touted.
READ MORE: 'No lawyer can guarantee you get Spain's digital nomad visa'
Is Spain’s digital nomad visa still worth it for foreigners?
As a visa option for non-EU nationals of a working age and mid income, the DNV still remains appealing.
If we turn our attention away from the anticlimactic tax conditions and application setbacks that can arise, the digital nomad visa is more suited to these freelancers and remote workers than the non-lucrative visa (no work allowed) and the golden visa (obtained by buying a €500K property).
The Spanish government also recently introduced the EU's Blue Card for highly-skilled and qualified workers to make it easier for such non-EU workers to reside in Spain, but this doesn’t fit the work profile of all digital nomads, entrepreneurs and remote workers.
Other more complicated options include the standard work visa option (which has admittedly now been made easier for non-EU workers who can fill positions Spanish employers are struggling to find workers for, but not all jobs) and the self-employment visa (involving a business plan presented to a panel of experts).
Therefore, for a non-EU freelancer or remote worker whose primary goal is to live in Spain by themselves or with their family, who doesn’t mind paying normal Spanish income tax rates, and who earns at least €2,520 per month or €30,240 per year, the digital nomad remains a valuable option for moving to Spain.
Furthermore, Portugal's recent 'anti-digital nomad crackdown', which has included scrapping perks such as allowing foreign income to be largely tax-free and any income earned in Portugal taxed at just 20 percent, means that neither Iberian nation is currently a 'tax haven' for remote workers.
READ MORE:
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Spain’s Startups Law, in force for around ten months now, generated an incredible amount of interest from overseas when it was first announced.
The core objective was to make Spain an easier and appealing destination for foreign talent, with numerous incentives and even a visa for non-EU digital nomads.
Of all these perks, the promise that digital nomads and remote workers would be eligible to pay non-resident income tax (IRNR) on their earnings rather than regular income tax (IRPF) was the key driving force for many who had previously feared Spain’s traditionally high fiscal burden.
After all, this was the difference between paying just 24 percent income tax on earnings of up €600,000 a year, or already paying 30 percent income tax from €20,200 in gross yearly earnings (the standard progressive IRPF income tax goes up to 47 percent from €300,000).
This favourable tax rate for internationals is nicknamed the Beckham Law. It’s been in place since 2004 and was initially available to inpatriate workers who were relocated to Spain, and in 2023 it was supposedly extended to other types of foreign remote workers benefiting from the Startups Law.
However, it has become increasingly clear over the course of the year that this hasn’t happened.
In October, The Local Spain spoke to readers and lawyers who explained how Spain’s new digital nomads were still waiting for their promised low tax rate, and having to pay standard IRPF income tax as a result.
Numerous other law firms have told the Spanish press that Spain’s tax body Hacienda appears to have scrapped the Beckham Law in 2023.
"From the moment they register with Social Security, they have six months to benefit from this (Beckham Law) tax regime, and normally within a period of one or two months they are informed their request has been favourable,” Almudena Medina, partner and tax lawyer at Madrid law firm Ceca Magán, told El Economista.
“However, the Spanish Administration currently tells them (digital nomads and remote workers) that they are waiting for the regulatory instructions to decide on their cases.
“These taxpayers and their employers need to know what withholding tax should be applied to them, they cannot be in limbo and even less so with a view to the annual tax declaration in June 2024," says Medina.
READ ALSO: Is Portugal's 'anti-digital nomad' stance a sign of what's to come in Spain?
It may be too early to suggest that Spanish authorities have decided to get rid of the Beckham Law tax regime completely, but it certainly seems like they have lacked foresight when promising fiscal benefits they don’t know how or if they want to implement, yet.
This is the biggest anti-climax for budding and existing Spanish digital nomad visa applicants, but other shortcomings have also emerged.
Many applicants have been coming up against lots of bureaucratic setbacks and obstacles, spending thousands on lawyer fees, taking weeks to gather documentation and getting it all translated.
READ MORE: The problems Spain's digital nomad visa applicants face
Even those who enlist the help of a law firm to process Spain’s digital nomad visa are not guaranteed they will have it approved.
Whether it’s due to the nature of their work not coinciding with the specifications of the new Startups Law or problems with the lack of social security exchange between Spain and other countries, the process to obtain the so-called DNV haven’t been as straightforward as touted.
READ MORE: 'No lawyer can guarantee you get Spain's digital nomad visa'
Is Spain’s digital nomad visa still worth it for foreigners?
As a visa option for non-EU nationals of a working age and mid income, the DNV still remains appealing.
If we turn our attention away from the anticlimactic tax conditions and application setbacks that can arise, the digital nomad visa is more suited to these freelancers and remote workers than the non-lucrative visa (no work allowed) and the golden visa (obtained by buying a €500K property).
The Spanish government also recently introduced the EU's Blue Card for highly-skilled and qualified workers to make it easier for such non-EU workers to reside in Spain, but this doesn’t fit the work profile of all digital nomads, entrepreneurs and remote workers.
Other more complicated options include the standard work visa option (which has admittedly now been made easier for non-EU workers who can fill positions Spanish employers are struggling to find workers for, but not all jobs) and the self-employment visa (involving a business plan presented to a panel of experts).
Therefore, for a non-EU freelancer or remote worker whose primary goal is to live in Spain by themselves or with their family, who doesn’t mind paying normal Spanish income tax rates, and who earns at least €2,520 per month or €30,240 per year, the digital nomad remains a valuable option for moving to Spain.
Furthermore, Portugal's recent 'anti-digital nomad crackdown', which has included scrapping perks such as allowing foreign income to be largely tax-free and any income earned in Portugal taxed at just 20 percent, means that neither Iberian nation is currently a 'tax haven' for remote workers.
READ MORE:
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