EXCLUSIVE: Spain clarifies which digital nomads will get lower tax rates
After months of uncertainty and disappointment, the Spanish government has finally clarified which remote workers and digital nomads will benefit from the Beckham Law's lower tax rates as promised, and which ones won't.
Non-EU remote workers and some digital nomads that moved to Spain in 2023 thanks to the Startups Law and its new digital nomad visa will benefit from the non-resident income tax rate (IRNR) of 24 percent as was promised, the Spanish government has confirmed, putting an end to months of uncertainty as to whether they would.
However, not all those who came to Spain on the digital nomad visa (DNV) can qualify for the IRNR available through the so-called Beckham Law special tax regime.
It has now been confirmed for remote contract workers, and those carrying out entrepreneurial work, training, research, development and innovative activities in Spain, but by the looks of it not freelancers on digital nomad visas who are registered as self-employed (autónomos).
This is according to an official state gazette (BOE) published by the Spanish government on December 6th 2023, which explains that the special tax rate will be extended to remote workers and some digital nomads, and will even be applied retroactively.
Spain’s Startups Law, in effect for around a year now, created a huge amount of international interest when it was launched at the beginning of 2023. The idea was to make Spain a more enticing destination for foreign talent, with several incentives and even a special visa for non-EU digital nomads.
READ ALSO: How digital nomads in Spain are still waiting for promised low tax rate
In particular, the pledge to digital nomads and other remote workers that they would pay the flat IRNR tax rather than regular and progressive income tax (known as IRPF in Spain), was one of the main motivators for foreigners wanting to take advantage of the digital nomad visa and work from Spain.
After all, this is 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 regime for foreigners is part of the the Beckham Law, and it would supposedly be extended to all types of non-EU remote workers benefiting from the Startups Law.
However, it soon became clear over the course of the year that this wasn't happening. In October 2023, 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 were paying IRPF tax rates in the meantime.
Numerous other law firms told the Spanish press this year that Spain’s tax authorities seemed to have all but ditched Beckham Law in 2023, or that it was "pending".
But now, following the BOE this week, the government has confirmed that some digital nomads and contracted remote workers who relocate to Spain will benefit from this lower tax rate by extending the scope of the rules for the Beckham Law.
According to the BOE: "the scope of application is extended to those who travel to carry out an entrepreneurial activity, to support entrepreneurs and their internationalisation, to highly qualified professionals who provide services to start-up companies and to those who carry out training, research, development and innovation activities.”
READ ALSO - Beckham Law: What foreigners need to know about Spain's special tax regime
On top of that, for the thousands of digital nomads and remote workers who arrived in Spain in 2023 hoping to take advantage of the reduced tax rates, the Beckham law will be applied retroactively.
According to the BOE: "The deadline for exercising the option for the special regime provided for in Article 93 of the tax act for taxpayers who acquired tax residence in Spain in 2023, as a result of moving to Spain in 2022 or 2023... shall be six months from the date of entry into force... except when Article 116 of these regulations grants a longer period."
However, like everything official in Spain, it’s not a simple black-and-white matter and what should happen in theory often doesn't materialise in practice. We will have to wait and see what happens.
Up to now, the boxes provided on the form or modelo 149 (needed to apply for the Beckham Law) have not included the special tax regime option for those on the digital nomad visa. This will have to change for the government's decision to be applicable.
For many remote workers, it may not actually be that beneficial for them to apply for Beckham’s Law. Tax expert Mark McMillan from Sun Lawyers previously told The Local Spain: “The special tax regime will be beneficial for those with an annual income from around €50,000 up to €600,000, so it will depend on your income bracket. Note that there are no allowances for your personal circumstances and as a result, people with spouses and children may find that they will pay less tax if they do not opt for the special regime”.
Self-employed digital nomads left out?
Encouraging though this news is, it does not mean that all those on digital nomad visas in Spain can qualify for the Beckham Law tax rates.
The BOE states that the special tax regime applies to trabajadores por cuenta ajena, those with a job contract, whereas self-employed people are referred to as trabajadores por cuenta propia, and they are not mentioned in the BOE (only entrepreneurs etc).
This may have already been anticipated by some, as in order to be eligible for the Beckham tax regime, you cannot be registered as self-employed in Spain, unless it's an entrepreneurial activity that is of an innovative nature and is of particular financial interest for Spain, which is what the latest state bulletin mentions.
For this, you must have a favourable report issued by the General State Administration.
Tax specialist Louise Carr previously stated on the DNV Facebook page. “Employees with digital nomad visa - eligible for Beckham flat tax rate of 24 percent. Self-employed with digital nomad visa - only eligible if you are carrying out an innovative activity that will benefit Spain (you'll need a report from a 'competent authority').
So far, it’s mainly been self-employed people and not contract workers sent overseas who have applied for the DNV, many of whom will feel further disgruntled about the fact that the Spanish government didn't provide clear and correct information about their fiscal responsibilities from the very beginning.
READ ALSO:
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Non-EU remote workers and some digital nomads that moved to Spain in 2023 thanks to the Startups Law and its new digital nomad visa will benefit from the non-resident income tax rate (IRNR) of 24 percent as was promised, the Spanish government has confirmed, putting an end to months of uncertainty as to whether they would.
However, not all those who came to Spain on the digital nomad visa (DNV) can qualify for the IRNR available through the so-called Beckham Law special tax regime.
It has now been confirmed for remote contract workers, and those carrying out entrepreneurial work, training, research, development and innovative activities in Spain, but by the looks of it not freelancers on digital nomad visas who are registered as self-employed (autónomos).
This is according to an official state gazette (BOE) published by the Spanish government on December 6th 2023, which explains that the special tax rate will be extended to remote workers and some digital nomads, and will even be applied retroactively.
Spain’s Startups Law, in effect for around a year now, created a huge amount of international interest when it was launched at the beginning of 2023. The idea was to make Spain a more enticing destination for foreign talent, with several incentives and even a special visa for non-EU digital nomads.
READ ALSO: How digital nomads in Spain are still waiting for promised low tax rate
In particular, the pledge to digital nomads and other remote workers that they would pay the flat IRNR tax rather than regular and progressive income tax (known as IRPF in Spain), was one of the main motivators for foreigners wanting to take advantage of the digital nomad visa and work from Spain.
After all, this is 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 regime for foreigners is part of the the Beckham Law, and it would supposedly be extended to all types of non-EU remote workers benefiting from the Startups Law.
However, it soon became clear over the course of the year that this wasn't happening. In October 2023, 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 were paying IRPF tax rates in the meantime.
Numerous other law firms told the Spanish press this year that Spain’s tax authorities seemed to have all but ditched Beckham Law in 2023, or that it was "pending".
But now, following the BOE this week, the government has confirmed that some digital nomads and contracted remote workers who relocate to Spain will benefit from this lower tax rate by extending the scope of the rules for the Beckham Law.
According to the BOE: "the scope of application is extended to those who travel to carry out an entrepreneurial activity, to support entrepreneurs and their internationalisation, to highly qualified professionals who provide services to start-up companies and to those who carry out training, research, development and innovation activities.”
READ ALSO - Beckham Law: What foreigners need to know about Spain's special tax regime
On top of that, for the thousands of digital nomads and remote workers who arrived in Spain in 2023 hoping to take advantage of the reduced tax rates, the Beckham law will be applied retroactively.
According to the BOE: "The deadline for exercising the option for the special regime provided for in Article 93 of the tax act for taxpayers who acquired tax residence in Spain in 2023, as a result of moving to Spain in 2022 or 2023... shall be six months from the date of entry into force... except when Article 116 of these regulations grants a longer period."
However, like everything official in Spain, it’s not a simple black-and-white matter and what should happen in theory often doesn't materialise in practice. We will have to wait and see what happens.
Up to now, the boxes provided on the form or modelo 149 (needed to apply for the Beckham Law) have not included the special tax regime option for those on the digital nomad visa. This will have to change for the government's decision to be applicable.
For many remote workers, it may not actually be that beneficial for them to apply for Beckham’s Law. Tax expert Mark McMillan from Sun Lawyers previously told The Local Spain: “The special tax regime will be beneficial for those with an annual income from around €50,000 up to €600,000, so it will depend on your income bracket. Note that there are no allowances for your personal circumstances and as a result, people with spouses and children may find that they will pay less tax if they do not opt for the special regime”.
Self-employed digital nomads left out?
Encouraging though this news is, it does not mean that all those on digital nomad visas in Spain can qualify for the Beckham Law tax rates.
The BOE states that the special tax regime applies to trabajadores por cuenta ajena, those with a job contract, whereas self-employed people are referred to as trabajadores por cuenta propia, and they are not mentioned in the BOE (only entrepreneurs etc).
This may have already been anticipated by some, as in order to be eligible for the Beckham tax regime, you cannot be registered as self-employed in Spain, unless it's an entrepreneurial activity that is of an innovative nature and is of particular financial interest for Spain, which is what the latest state bulletin mentions.
For this, you must have a favourable report issued by the General State Administration.
Tax specialist Louise Carr previously stated on the DNV Facebook page. “Employees with digital nomad visa - eligible for Beckham flat tax rate of 24 percent. Self-employed with digital nomad visa - only eligible if you are carrying out an innovative activity that will benefit Spain (you'll need a report from a 'competent authority').
So far, it’s mainly been self-employed people and not contract workers sent overseas who have applied for the DNV, many of whom will feel further disgruntled about the fact that the Spanish government didn't provide clear and correct information about their fiscal responsibilities from the very beginning.
READ ALSO:
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