Spain Regulates Remote Working for Foreign Digital Nomads

March 2023

Spain attracts many foreign Non-EU investors, entrepreneurs and professionals that want to set up and promote their business in the country. Spain Startups Law which entered into force in 1st of January 2023 creates a special visa for digital nomads applicable to both teleworkers and investors of these companies which will allow them to access the tax advantages established by this new Law.

The goal of the Law is to set forth a legal framework to support the creation and growth of emerging companies in Spain. The Law regulates a series of tax benefits and new types of visa and residence permits in the country. Tax benefits applicable to the companies, their employees as well as researchers, entrepreneurs, and digital nomads.

Particularly notable are the rules on residency due to international remote working of the nationals of third countries who are authorized to remain in Spain to carry out remote professional or labour activities for companies located outside Spain, through the exclusive use of computer, electronic and telecommunications equipment and systems. In the case of pursuit of labour activities, it is only possible to work for companies located outside Spain. With the pursuit of professional activities, work may be provided for a company located in Spain, given that the percentage of time worked is not more than 20% of the total professional activity.

Requirements are also established to obtain visas (for foreigners who intend to live in Spain to work remotely for a company that is not located in Spain, for a maximum period of one year) and residency authorizations (for foreigners who reside in Spain on a regular basis or who have entered Spain on a visa and want to live and work remotely for a company located abroad, for a maximum period of three years, extendable for two-year periods, provided that the conditions established are met).

• The Tax benefits regulated by the Law are applicable to the companies, their employees as well as researchers, entrepreneurs, and digital nomads.
• The Corporate Tax Rate is 15% (the general rate is 25% of Company Tax) for both the first tax period in which they obtain a profit and the following tax period.
• Deduction of 50% of those investments made in newly or recently created companies with the limit of €100,000. (The period in which a company is considered to be newly created is up to 5 years for all sectors and up to 7 years for companies in the fields of biotechnology, energy and industry.)
• Possibility to request the deferral of the corporate tax debt or the income tax of non-residents in the first two years in which the tax base is positive with a waiver of guarantees and without accrual of default interest, for a period of 12 and 6 months, respectively.