Professional ‘Nomads’ Are Flocking to Spain

Even before the pandemic and remote work helped to erase global borders for workers, digital nomads have existed among tech-savvy professionals who were able to successfully apply the ‘work from anywhere’ model. COVID fueled this desire, as we read stories about lucky workers who found themselves stranded in flagship digital nomad hotspots such as Bali and Bangkok. 

A remote workforce is now acceptable and even realistic today, and regions around the world are devising incentives to attract digital nomads, their families, and even small businesses. There are 54 countries with digital nomad visas, and the best ones offer a combination of good weather, fast Internet, are safe to live in and have lots to do. 

In Europe, Spain’s digital nomad visa law, known as Ley De Startups, or Law of Startups, came into effect at the start of 2023. This new visa policy, authorized by the Spanish government, facilitates a one-year, extendable residency for the throngs of educated workforce participants already living and working in Spain as well as helps position the country as a more favorable destination for those thinking about taking the leap.  

We spoke with Damian Carmona, Managing Partner at Carbray, one of Spain’s leading law firms specializing in expat needs for domiciling in Spain. Carbray focuses on residency and nationality law, and the firm is seeing a significant uptake in inquiries from individuals interested in the digital nomad visa. 

What makes Spain’s digital nomad visa unique and exciting?

The digital nomad scene had commonly been associated with gap years or for bohemian youngsters basing themselves in the top cultural destinations around the world. While there were already special visa and residence permits for EU citizens or foreign expats employed in Spain by international employers, there wasn’t an arrangement whereby remote workers could apply for the non-lucrative visa and the tax arrangements weren’t attractive enough. 

The modification of the law 14/2013, the Law of Startups, has created a new legal concept that did not exist before. This is undoubtedly a novelty in our legislative system because up until now it was not contemplated in any way that non-EU people could come to Spain to work remotely. Taking into account that in this new era teleworking is very common, it is an excellent opportunity for those wanting to reside and work in Spain.

What are the requirements for individuals or small businesses looking to work and live in Spain?

There are definitely some requirements to meet. It’s not merely meant to provide an easier path for the gap year or travelling nomad and overall these requirements are useful in helping Spain attract professional workers. 

First off, the applicant must be carrying out a professional activity remotely, either as an employee of a company outside of Spain, or as a freelancer working with one or several companies. If the applicant is a freelancer, he or she can work for a Spanish company, provided that the Spanish company doesn’t constitute for more than 20% of the applicant's total professional activity. The relationship needs to be established with the entity that is providing the employment. They must prove that this company allows them to carry out their work remotely, and they have to have been working for this entity for at least three months prior to submission of the application. That same company must also be proven to be a reputable business in that they have been carrying out their business activity for at least one year. 

On the credentials front, the applicant must be a graduate or postgraduate from a recognized University or from a professional training and business school of recognized prestige. As a substitute for this educational requirement, they can substitute a minimum of three years' professional experience in the sector they are currently working in.

And of course, they must have health care coverage. This is where it gets a little tricky. Depending on the employment status of the applicant, obtaining Spanish health care coverage can be easy or difficult. If you are self-employed, it is very straightforward, however, for employees of a company, it’s a lot more complex.

Can you walk us through the steps to applying for this visa?

Outside of Spain, an applicant could apply through the Spanish Consulate. In this case, the applicant would have a visa for one year that would allow him or her to reside in Spain. Obviously, there are a lot of digital nomads who are already living in Spain.They may be in Spain on a tourist visa or within the EU’s Schengen allowance. With this type of credential, the applicant would have an authorization to reside in Spain for up to three years.

If the applicant comes to Spain with a visa obtained from outside of Spain and would like to continue their stay in Spain, he or she may request the authorization within 60 calendar days before the expiration of the visa, as long as they continue to meet the requirements. Here the applicant would receive authorization to reside in Spain for three years.

Exact requirements vary depending whether the applicant is employed or self-employed. Self-employed workers must have a professional relationship with companies and not with various individuals just doing contractual work. The way to prove this is by means of contracts with these collaborating companies, as well as invoices issued and received by the self-employed applicant.

How long does the process take from initial application to getting the permit?

It’s really a quick process. From the time the application is submitted, the UGE-CE (Unidad de Grandes Empresas y Colectivos Estrategicos -translated as Unit for Large Companies and Strategic Collectives) has 20 business days to provide a resolution outcome to each application. Once approved, the next step would then be the fingerprint appointment and issuance of the TIE card, which is a foreign residency permit card for Spain. The expediency is helped by taking into account that it is currently only possible to file in Spain. 

What’s a typical profile of a worker who you think will be utilizing this visa? 

We are seeing that the main profile is young people looking for new opportunities outside their home countries. Many of them come with families but many others come alone as well. Although it is true that there are both self-employed and employees, the truth is that many of them are self-employed who have their own companies and given the nature of the companies, they are finding they can manage them from Spain rather than having to be in their original country.

What nationalities are predominantly taking advantage of this?

The truth is that both the U.S. and the U.K. are taking advantage of it the most, I suppose because of the similarity of management of the countries and also because of the ease that bilateral agreements give when it comes to obtaining documents. We are also receiving lots of clients from Canada.

What are the tax issues to know about, both for digital nomads as well as businesses?

The most standard thing to start off with is understanding that digital nomads taking advantage of this new legislation become Spanish tax residents. This means that they will have to pay taxes in Spain on their worldwide income and, in some regions, their worldwide wealth. Of course, there are routes to reduce this taxation, such as the Special Expatriate Tax regime (known as ‘the Beckham Law’), but it is important to check the eligibility and the convenience of applying for this route. 

There are two models to address on the tax side. Businesses that are looking to deploy one or several of their employees in Spain have to address two implications. First off, Social Security-wise, the employee must be covered in Spain by the company, either directly—by registering the foreign company in Spain—or through a Certificate of Coverage. 

For a more direct presence in Spain, where the digital nomad or employee has offices or is performing the main activity of the company in Spain, the company could be classified as having a Permanent Establishment in Spain, which would result in certain corporate tax obligations for the foreign company in Spain. This is a scenario where the founder and CEO of a business decides to relocate to Spain and be the main presence, perhaps with a more visible office presence. 

Spain has great cities like Madrid and Barcelona but also a variety of smaller mountain and coastal locations. Where is everyone flocking to?

While Madrid and Barcelona are the top destinations, Malaga is also up there, as well as the Balearic Islands. Spain has always been able to attract visitors for its sunny coastal locations. There’s a big mix. Part of the motivation behind the new law is to attract foreign workers not only to bustling cities like Madrid or Barcelona but also to underpopulated rural areas of Spain, which provide the perfect environment for the digital nomad who wants to truly immerse themselves in authentic Spanish culture, far from the tourist hotspots. 

What has the reaction been from local Spanish residents to this law and the likely growing intake of foreigners to their cities and towns?

We are not aware of any reactions of Spanish residents that are negative. We imagine that residents will be happy that the country is attracting new talent and bringing in more money. There has even been a new organization of Welcoming Villages that are offering help with finding accommodation, connectivity and community-building schemes.

If you’re a worker or a business considering a digital nomad visa in Spain, you can fill out the contact form on the Carbray website to arrange an initial consultation free of charge and discover what options are available to your unique needs.