With the rise of remote work in recent years, many countries have introduced a so-called ‘digital nomad visa’ – a special visa designed for foreigners who come to stay in a new country while working remotely for employers or clients in another country.
One such country which launched its much-anticipated digital nomad visa earlier this year is Spain. In the lead-up to its release, many sources mentioned that one of the incentives of this visa for remote workers was a lower income tax rate.
As a digital nomad visa initially permits a stay in Spain of up to 1 year, the visa holder would become a Spanish tax resident if they lived in Spain for longer than 183 days of the year – and tax residents would be liable for progressive rates of up to 48%.
However, the tax benefits of a Spanish digital nomad visa were rumoured to include access to the lower non-resident tax rate available under Beckham’s Law.
This would offer a much more favourable flat rate of 24% – but has its availability for digital nomad visa holders turned out to be true or not?
What is Beckham’s Law in Spain?
The informal name for this law in English came from the footballer David Beckham, who was one of the first to use it when playing for Real Madrid – though this tax regime is no longer available to professional sports players and athletes.
In Spanish, it is the Régimen Especial para Trabajadores Desplazados (Special Regime for Displaced Workers). It allows foreigners who move to Spain as part of their employment to maintain a non-tax resident status for 5 years.
For this period, eligible expats will only pay 24% income tax in Spain on earnings up to 600,000€ a year. Whereas, if they were billed as a tax resident, they could be paying 45% on annual earnings between 60,000€–300,000€.
Given that tax residents may also have to pay taxes on global income to the Spanish government, while non-tax residents are only taxed on income earned within Spain, this is another advantage that comes with Beckham’s Law.
Are digital nomads eligible for Beckham’s Law?
Anyone who is not a Spanish national can apply for Spain’s Special Regime for Displaced Workers, but to be eligible for approval, applicants must meet the following conditions of:
- Not being a tax resident in Spain for the previous 5 years
- Being ‘displaced’ (moving to Spain) under an employment contract
- Performing all employment responsibilities in Spain (no more than 15% abroad)
- Earning income from a Spanish company, not a permanent establishment abroad
Typically, applicants must have a job offer for employment in Spain, be an employee of an international company transferred to a post in Spain, or be a director of a company located in Spain (owning no more than 25% of its shares).
When it comes to the requirements for a digital nomad visa, these can seem contradictory – as applicants must either work exclusively for a foreign employer, or be self-employed with at least 80% of their clients being outside of Spain.
However, remote employees with a valid digital nomad visa could still be eligible, and self-employed workers could also be eligible if they carry out entrepreneurial activities that benefit Spain (as approved by a competent authority).
The problem that digital nomad visa applicants have been running into is that the Spanish tax agency has yet to update their forms, as the new regulations are still under development – meaning there is no route to apply for Beckham’s Law with a digital nomad visa yet.
As applicants must submit the forms for the special regime within 6 months of moving to Spain, anyone who moves on a digital nomad visa may find themselves unable to apply for Beckham’s Law if new procedures are not established within this timeframe.
Is it worth applying for Beckham’s Law as a digital nomad?
If you are considering moving to Spain as a remote worker and earn between 50,000€–600,000€ a year, the fixed tax rate would likely be very advantageous for you.
Of course, whether Beckham’s Law is the most suitable option depends on your personal circumstances – not just income, but also family members moving with you and any assets such as property that you may obtain in Spain.
You can only apply for the special tax regime once, and cannot rejoin if you decide to waive this status after approval, so it requires thinking through carefully.
It may also be worth waiting a little longer before putting your plans in motion, and keeping up to date with legal developments so you know when the facilities to apply for Beckham’s Law with a digital nomad visa are available.
It is a good idea to get professional legal advice from Spain immigration lawyers, who can assess your situation to find the most appropriate visa and tax management route for you to live and work in Spain on your schedule.
