UK Spain Tax Treaty & Spanish Remote Working Digital Nomad Visa

Simon Misiewicz

Expat & Property Tax Specialist

20th December 2021

2023 update: What is the Spanish Digital Nomad Visas for Working Remotely

What is the Spanish Digital Nomad Visa for Remote Workers?

Spain, like many countries, wishes to bring people into the country to boost its economy. The Spanish government and embassy designed a new visa for foreigners to spend more time in Spain. The visa in question is called Spanish Digital Nomad Visa and has been designed for Foreign Remote Workers.

The Ley De Startups introduced by the Spanish government encourage workers who use laptops and work for a foreign country to spend their time and money in Spain.

There are many tax benefits for entrepreneurs with a foreign business or employees who work for a foreign employer but wish to live in Spain. When we talk about foreigners, we refer to non-EU (European Economic Area EEA) citizens moving to Spain.

The new Spanish Digital nomad visa for remote workers will allow non-EU citizens to work for and live in Spain for 3 years but can be extended for a period of two years each time.

International Expat Tax Advice: Working as an employee, employing people, real estate property investing in the UK, US or Spain or conducting a service-based business trade activity. You will need to get tax advice from an international tax advisor that truly understands your international tax circumstances

How to get a remote worker digital nomad visa in Spain

Albeit you can apply for a remote worker digital nomad visa at the Spanish Embassy, we recommend that you utilise the services of a lawyer/attorney. Working with a Spanish attorney who has moved to Spain from your own country is better. That way, they will understand your country’s particulars and will support you in your native tongue.

The application process is relatively swift, and surprising, given that many Spanish visa processes have lengthy timescales. There seems to be a sense of urgency to stimulate the Spanish economy with remote workers moving to their country.

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What is the criteria to obtain the Spanish Digital Nomad Visa?

The Spanish government has provided strict criteria for foreign / non-EU citizens who want to apply for the digital nomad visa for remote workers.

The foreign employer

The employer must have been trading for at least one year. This means that a startup company that has been trading for less than one year would not meet the criteria, and the employee would not be able to apply and live in Spain under this new visa.

The foreign non-EU employee

The foreign non-EU employee must have worked with the company for at least three months. It would be better to demonstrate a longer-term track record, but three months is the minimum.  A contract of employment would be required with a letter from the employer to demonstrate a willingness for the employee to be w remote worker and to reside in Spain.

The person wishing to work in Spain under the digital nomad visa must possess a degree and have at least three years of experience in their field of expertise.

The employee must have sufficient earnings to meet their lifestyle requirements living in Spain. The remote worker must earn €2,334 per month / €28,000 per year. This will increase as Spain reevaluates its minimum wage policy.

Less than 20% of the earnings must be from Spanish customers/employers.

You must not have a criminal record in the country you currently live in or in Spain. You must produce a criminal records certificate with a minimum validity of 90 days.

International Expat Tax Advice: Working as an employee, employing people, real estate property investing in the UK, US or Spain or conducting a service-based business trade activity. You will need to get tax advice from an international tax advisor that truly understands your international tax circumstances

UK Spanish Treaty - Double taxation agreement

In 2013 the UK-Spain treaty was renewed to secure a double taxation convention.

First created in 1976, the agreement stipulated how individuals and ex-pats should be taxed if an individual is classed as a resident in both countries. The treaty between the United Kingdom and Spain also focused on those living in one country and deriving income in another.

The UK-Spain treaty is designed to prevent individuals from paying tax twice on the same income.

Individuals may have to pay tax in the UK and Spain if they are residents in the UK and have income or gains in Spain or if they are non-residents in the UK and have income or gains in the UK.

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What are the basics of the treaty between the UK and Spain?

As property accountants serving thousands of UK landlords who purchase buy-to-let properties, we know that the UK-Spanish treaty can be daunting and difficult to understand.

The double taxation convention between the UK and Spain entered into force on 12 June 2014 and is effective for the following:

– In the UK, for withholding taxes on income, for corporations, and CGT

– In Spain, for withholding taxes on income, for corporations, and CGT

Double Taxation Agreements (DTAs) can protect individuals and businesses from the risk of double payments made to the respective authorities.

DTAs can protect a government’s taxing rights.

Suppose you are resident in two countries simultaneously or in a country that taxes your worldwide income, and you have income and gains from another country. In that case, you may be liable for the same income in both countries.

An individual resident in the UK with rental income from a property in Spain will probably have to pay tax on the rental income in both the UK and Spain.

In practice, the remittance basis helps prevent double taxation where a UK resident has foreign income and gains abroad.

A DTA overrides domestic law.

If you are a UK resident, HMRC generally gives credit for overseas tax paid in Spain.

International Expat Tax Advice: Working as an employee, employing people, real estate property investing in the UK, US or Spain or conducting a service-based business trade activity. You will need to get tax advice from an international tax advisor that truly understands your international tax circumstances

Where do I pay taxes if I'm resident in the UK and Spain? 

You automatically become a fiscal resident in Spain if you reside there for more than 183 days in any 12 months.

For individuals who live and work the majority of the year in one country and use their property in another country as a second home or gain rental income, taxes will be paid into the host country.

If you are a resident but do not work in a permanent establishment in either country, do not work at all, or cannot provide your means of subsistence, your tax is due in the country where you have your habitual abode.

Alternatively, you will be taxed in the country for which you are a national and hold a passport.

If you are deemed a resident in both the UK and Spain, the treaty comes into effect for your obligations.

If you spend more than 183 days per year in that country in both the UK and Spain, you are considered a resident; these days do not need to be consecutive.

There are also other scenarios to consider.

– You are obliged to declare the income on Spanish rentals to the authority, no matter where you reside.

– If you are a resident of the UK, the treaty comes into effect.

As the property is based in Spain, you must legally present a declaration to the Spanish authorities.

As a UK resident, you will also have to declare that income to HMRC, and the tax already paid to the Spanish government will be offset against your bill in the United Kingdom.

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How much do non-residents pay in Spain?

Non-residents are taxed at a flat rate of income obtained in Spanish territory at 24% for work income and 19% on capital gains and financial investment income arising from Spanish sources.

Specific rates apply to certain other types of income.

Non-residents must file their returns on an individual basis. There is no joint filing responsibility.

Payers of Spanish-sourced income must withhold tax at source on each payment made.

You’ll receive a personal allowance for your Spanish income tax if you are a Spanish resident.

Unlike in the UK, where this personal allowance rises year-on-year, the allowance has been reduced in Spain in recent years.

For the 2021 Spanish fiscal year, there is a basic personal allowance for people under 65 of €5,550.

Once reaching 65, the allowance rises to €6,700, and from the age of 75, this increases again to €8,100.

There are also many other allowances, including a married couple, child, and disability allowance.

Due to the complexity of these allowances, it is recommended that British expats speak to an expat expert before establishing their overall allowance.

Are there any exemptions under the UK Spanish treaty?

Under the UK & Spanish treaty, certain UK pensions are exempt from taxation in Spain.

The UK will continue to deduct tax at source from UK pension income (except for UK state retirement pension, which is always paid gross) until they are satisfied that you are both a resident and paying tax on this income in Spain.

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