Spain’s appeal for remote workers is undeniable, thanks to its warm weather, rich culture, and great infrastructure. However, if you plan to live and work remotely in Spain, understanding the tax system is crucial. Taxes in Spain can be complex and vary depending on your residency status, employment situation, and length of stay. This guide provides an overview of what you need to know about taxes as a digital nomad, whether you’re employed by a foreign company or working as a self-employed professional (autónomo).
Spain has a relatively high tax rate, so being familiar with its tax system is essential to stay compliant. As a digital nomad, you need to determine your residency status, understand income tax rates, and be aware of social security contributions. Navigating these areas can help you avoid legal issues and take advantage of tax benefits available to remote workers.
Tax Residency in Spain
You are considered a tax resident in Spain if you:
As a tax resident, you must pay taxes on your worldwide income, meaning all earnings, regardless of where they come from, are subject to Spanish taxes.
Non-Resident Status
If you stay in Spain for less than 183 days and have no economic ties, you will be a non-resident. Non-residents only pay taxes on income earned in Spain, such as from a Spanish employer or property rentals
If you’re employed by a foreign company and hold a Digital Nomad Visa, you may benefit from the Beckham Law. This law allows foreign workers to be taxed as non-residents, meaning you only pay a 24% flat tax on Spanish income up to €600,000, exempting your worldwide income. The Beckham Law applies for up to six years.
To qualify:
If you don’t qualify for the Beckham Law, or after its period ends, you will be subject to Spain’s progressive income tax rates:
Self-employed digital nomads, known as autónomos, are subject to Spain’s progressive tax rates on their worldwide income. Autónomos can also deduct business-related expenses such as travel, office supplies, and home office costs.
Autónomos must contribute to Spain’s social security system, which offers healthcare, pensions, and other benefits. Contributions depend on income, with rates ranging from €230 to €500+ per month. New autónomos can benefit from reduced rates for the first year.
If your home country has a social security agreement with Spain, you may avoid contributing to both systems. Otherwise, you will need to contribute to the Spanish social security system even if your employer is based abroad.
Spain has double taxation treaties with many countries, such as the UK and the US, to prevent being taxed on the same income in both countries. Typically, you can claim tax credits for taxes paid in Spain when filing in your home country.
Spain also levies capital gains tax on income from investments:
Additionally, Spain imposes a wealth tax on individuals with assets above a certain threshold, ranging from 0.2% to 3.5%, depending on the region.
Spain is a fantastic destination for digital nomads, but understanding its tax system is essential to fully enjoy your time there. Whether you’re employed by a foreign company or working as a freelancer, knowing your tax residency status, how social security contributions work, and the benefits of the Beckham Law can help you manage your finances effectively. Plan ahead, consult with a tax advisor, and take advantage of double taxation treaties to optimise your tax situation and enjoy Spain to the fullest.