A guide for temporary remote workers “Digital Nomads”

At first glance, the concept of a Digital Nomad might seem obvious to the general public, however, in reality it is not, at least not under Spanish law.

Indeed, Spanish law has caused confusion about the meaning of this term. As it has only been addressed from an immigration point of view, it only encompasses non-EU citizens, despite the fact that a great number of digital nomads who choose Spain as their workplace are of European nationality. In order to avoid confusion, in this article we use the term “remote worker” over that of “digital nomad” when we refer to individuals who travel around the globe to work from different countries combining work and tourism in the country where they temporarily stay.

The importance of legislation

On several occasions ECOVIS Legal Spain – Canary Islands have been asked by foreign professionals and companies about the implications of doing remote work from Spain, especially from an immigration, taxation, and Social Security perspective. All important matters to be considered, not only because the three subjects are main concerns to consider when moving to work in another country, but also due to the limited or inexistent specific regulations at EU-level, despite its publication of Guidance Notes, as well as at country level.

In Spain, we have recently experienced some progress after the legislative authorities have finally understood that traditional employment relationships have evolved, presenting a new employment context which needs to be addressed legally. Nevertheless, there is still a long way to go in terms of specific regulations.

Remote Work from an Immigration perspective

From an immigration point of view, the implementation of a Remote Work Visa and Authorization has placed Spain on the map for remote workers from any non-EU country. With this new permit, non-EU citizens can work remotely from Spain and, even apply for permanent residence after having completed 5 years of remote work in the country. For more info see below chart.

Recent taxation changes which affect remote workers

Since 1 January 2023, remote workers in Spain may opt to pay non-resident income tax for the period established by law, if all requirements set out, are met. If non-resident income tax regime is chosen, the individual shall pay income tax at a flat rate of 24% up to EUR 600,000 of earned income. Before this law change, this regime was only devised for cases where the move to Spain was ordered by the employer (temporary posted workers) and not at the free will of the employee, which is generally the case for remote workers.

Social Security perspective

From a Social Security point of view, remote work has not yet been addressed by any specific Spanish law, however this doesn’t mean that there cannot be a solution for each situation. Indeed, the lack of specific regulations means that each case, along with its particularities, must be thoroughly studied and assessed. For more info see below chart.

In order to provide a broad overview and understanding of these topics we, at ECOVIS Legal Spain – Canary Islands, have produced a schematic chart. The information contained in the chart below is intended to give a general idea, since some of the provisions set forth below are subject to a series of requirements, limitations and/or exceptions which are not encompassed therein. Therefore, each specific situation and its particularities would need to be studied on a case-by-case basis.

EU/ EEA / Swiss EMPLOYEE


EU Employer

o   Immigration
 
No work permit required. For stays exceeding 3 months registration at Central Registry of Foreign Nationals is required.
 
o   Taxation
 
IRPF not applicable where (i) the stay in Spain does not exceed 183 days or (ii) Spain is not main base or centre of activities and/or economic activities. Otherwise, the employee will be considered tax-resident. IRNR and Double Taxation agreements to be considered.*¹
 
o   Social Security

Not yet regulated in Spanish legal system. Each case must be studied on a case-by-case basis.

Some countries extend the issuance of the A1 form (Statement of applicable legislation) -originally devised for posted workers and employees working in several countries at the same time- to remote workers (digital nomads) who temporarily and occasionally work remotely from another EU country.
 
Where the obtaining of an A1 certificate is not possible, the employee might also be exempt from registering/paying Social Security in Spain if the country of employment and Spain have entered into an agreement on this regard.
 
Where neither of above options apply (A1 certificate/international agreement), the employee shall register and pay Social Security in Spain.
        
Non-EU Employer

o   Immigration

No work permit required. For stays exceeding 3 months registration at Central Registry of Foreign Nationals is required.
 
o   Taxation
 
IRPF not applicable where (i) the stay in Spain does not exceed 183 days or (ii) Spain is not main base or centre of activities and/or economic activities. Otherwise, the employee will be considered tax-resident. IRNR and Double Taxation agreements to be considered.*¹
 
o   Social Security
 
If there exist an international Social Security agreement between the country of employment and Spain, the employee will be exempt from registering and paying Social Security in Spain provided that under said agreement he/she can be granted with a Social Security coverage certificate issued by the country of employment.
 
If no such agreement exists, the employee shall register and pay Social Security in Spain.           
NON-EU / EEA / Swiss EMPLOYEE


EU Employer

o   Immigration
 
Visa/Authorization for international remote work required (“digital nomad visa/authorization”).
 
o   Taxation
 
IRPF not applicable where (i) the stay in Spain does not exceed 183 days or (ii) Spain is not main base or centre of activities and/or economic activities. Otherwise, the employee will be considered tax-resident. IRNR and Double Taxation agreements to be considered.*¹
 
o   Social Security
 
Not yet regulated in Spanish legal system. Each case must be studied on a case-by-case basis.

Some countries extend the issuance of the A1 form (Statement of applicable legislation) -originally devised for posted workers and employees working in several countries at the same time- to remote workers (digital nomads) who temporarily and occasionally work remotely from another EU country.
 
Where the obtaining of an A1 certificate is not possible, the employee might also be exempt from registering/paying Social Security in Spain if the country of employment and Spain have entered into an agreement on this regard.
 
Where neither of above options apply (A1 certificate/international agreement), the employee shall register and pay Social Security in Spain.              
Non-EU Employer

o   Immigration
 
Visa/Authorization for international remote work required (“digital nomad visa/authorization”).
 
o   Taxation
 
IRPF not applicable where (i) the stay in Spain does not exceed 183 days or (ii) Spain is not main base or centre of activities and/or economic activities. Otherwise, the employee will be considered tax-resident. IRNR and Double Taxation agreements to be considered.*¹
 
o   Social Security:
 
If there exist an international Social Security agreement between the country of employment and Spain, the employee will be exempt from registering and paying Social Security in Spain provided that under said agreement he/she can be granted with a Social Security coverage certificate issued by the country of employment.
 
If no such agreement exists, the employee shall register and pay Social Security in Spain.

*¹ Since 1 January 2023, remote workers in Spain may opt to pay non-resident income tax for the period of time established by law, if the requirements set out in applicable the same are met. If non-resident income tax regime is chosen, the individual shall pay income tax at a flat rate of 24% up to EUR 600,000 of earned income.
IRPF = Personal Income Tax applicable to tax-residents.
IRNR = Non-resident income tax.

If you are a remote worker or considering becoming one with the need to have your case assessed, our experts at ECOVIS Legal Spain – Canary Islands can happily provide you with customised legal advice according to the particularities of your personal situation. For direct enquiries you can contact us here or directly at [email protected].

Photo credits: Avi Richards