Dreaming of late evenings in stunning tapas bars and weekend trips to some of Europe’s best beaches? It has been anticipated for over 16 months, and Spain’s Parliament has finally given the “go-ahead” to a new startup and digital nomad law which paves the way for a new generation of visitors and nomads to use Spain as “home” base.
If you are considering living and working in Spain, this new law will bring tax benefits and other perks to digital nomads, entrepreneurs, and remote workers. Perhaps most compelling for remote workers, are the details of Spain’s New Digital Nomad Law.
As the world embraces this exciting trend, it’s clear that lovely Spain wants in, too.
Spain’s Startups And Digital Nomad Law
The expectation is that this long-touted, but brand-new digital nomad law will take effect on January 1st, 2023. The nuance of the tax laws and when new fiscal laws will take place for dealing with tax from 2023 is a huge motivator for speedy approval.
Basically, this means there is a financial incentive for the Spanish authorities to have the law operating by January 1st.
The startup law known as Ley de Startups still needs approval in the Spanish Parliament, which is expected in January 2023. With significant legislative support, it should be ratified easily within the coming weeks.
Broad stroke, the law will be open to those from the EU or third countries — aka those outside of Europe where there will be considerable interest – as long as they have not been a resident in Spain in the previous five years.
Major Points – Spain’s New Digital Nomad Law
The most compelling part of the legislation is Spain’s New Digital Nomad Law. This legislation has several awesome benefits for digital nomads.
There is a specific definition of a digital nomad, and the new law defines a digital nomad as “people whose jobs allow them to work remotely and change residence regularly.”
The significant points include the following:
- Tax Breaks For Digital Nomads
- A New Visa for Digital Nomads
- Extension of Foreign Student “Stay Period” Post Graduation
Tax Breaks and New Digitial Nomad Visa
Benefits include a tax rate reduced to 15 per cent for investors, start-ups and remote workers who find income in Spain, as long as they comply with the residency rules and do not stay for more than 183 days in a year.
This tax rate is a further reduction of the non-resident income tax (IRNR) of approximately 25%, and will also specifically apply for digital nomads. Digital nomads will also enjoy this 15% tax rate and will be able to stay longer
The new law creates a digital nomad visa offering a year in Spain, which can be extended to a residence authorization of two years — and then an additional five years. Stay a while, maybe?
While the Digital Nomad Law section of Ley de Startups is relatively straightforward, you will want to study things further if you’re really considering basing your startup in Spain.
Several requirements, including “a need for innovation,” must be accredited both for this status and that of an ’emerging’ company. There is the potential for a corporate tax rate reduction to 15 per cent for up to four years.
Rise In Digital Nomad Offerings
The digital nomad life is a fun and adventurous lifestyle, fabulous for those who can take advantage of the freedom, even if only for a few years. There’s nothing quite like the travel joy of immersion, bringing a deep understanding of a destination.
From Colombia to Vietnam to Dubai, Barbados, Mexico and many-many more, there’s been a huge uptick in destinations attempting to lure long-term visitors in.
Countries now believe it’s a lot better to have people spending money in the country and therefore supporting local businesses and creating tax revenue than arbitrarily being kicked out. Nomads typically bring robust support of cafes, restaurants and neighbourhood shops, while filling apartment vacancies.
With Spain’s big announcement, there’s lots of good news here for digital nomads, which leaves just one additional, exciting decision, and that’s where in Spain you may actually want to live. This chilly time of year, it’s tough to beat Valencia or Mallorca, but the classic Madrid or Barcelona is always a fun debate.