With a view to meet the demands of the current global working landscape and match the competitive legal framework already established in various countries including a number of EU member states, the Spanish Government has published the preliminary draft Bill of the so-called “Startups Law”. The new law envisages tax and residency benefits for remote employees and self-employed professionals who wish to work and reside in Spain, thus converting Spain into a more accessible and attractive hub for “digital nomads”.
The preliminary draft Bill defines digital nomads as foreign citizens employed by a company located outside of Spanish territory who relocate to Spain to work remotely via telematic means, or foreign self-employed professionals who also work remotely via digital means.
Amongst the many initiatives proposed in the preliminary draft bill, we would like to highlight the following:
- Tax incentives. The preliminary draft Bill text establishes certain tax incentives for remote workers, predominantly reduced rates of Non-Resident Personal Income Tax (IRNR Tax). Therefore, the law contemplates incorporating remote workers into the IRNR Tax scheme. IRNR tax has always been more advantageous than Ordinary Income Tax and now promises to be even more so due to the preliminary draft Bill proposing to reduce the payable rate to 15% during a maximum period of up to four years.
- Residency incentives. As regards the residency VISA for Digital Nomads or remote teleworkers, the VISA may be requested by non-resident foreign citizens who wish to relocate to Spain to work remotely. The VISA shall be issued for an initial period of one year with the possibility of renewal for a further two years, as long as the initial eligibility criteria is still met.
In order for Self-employed professionals to be eligible to benefit from the special VISA (VISA for digital nomads) they must be able to prove that the majority of their income is paid by foreign companies, and that any income from Spain does not exceed the limit of 20%.
As previously stated, this is still a preliminary draft Bill subject to amendment and yet to be adopted as law. Once adopted, the new Law will regulate the specific requirements and benefits applicable to Digital Nomads opting to move to Spain.
At MSG LEGAL, our team of highly specialised Immigration, Conveyancing and Property lawyers in Spain, will keep you informed of all new developments to this in our upcoming publications.