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If the teleworker had not met either of the two criteria for tax residency, then Spain would only be able to tax income earned when the individual was working from Spain and not their worldwide income. Taxation in this situation would be Non-Resident Income Tax. On 9 February 2021, the Spanish General Directorate of Taxes set out its official response to an enquiry about the tax residency of a teleworker from the UK who was living and working in Spain. This is a binding decision that establishes the residency status, for tax purposes, of a foreign worker carrying out remote working in Spain.
By submitting this form you agree to our Privacy Policy & Terms of Use. You will be sent an opt-in email with data privacy information to confirm your subscription. We can advise you on your tax status and ensure that you do not fall foul of the Spanish tax authorities. Del Canto Chambers are the first Anglo Spanish Tax & Legal firm regulated by the Bar Council of England and Wales and the Colegio de Abogados de Madrid. With offices in London and Madrid, we specialise in representing and acting for foreign clients in Spain.
Working remotely in Spain for a UK based company
This should not be a problem because an individual may continue making contributions to the UK system by paying Class 3 national insurance contributions. These can be paid or annually, approximately £800 for a full year of qualifying contributions, or payments may be made by monthly direct debit. However, just as there may be a double tax agreement which protects you from exposure from income tax in that country – there may be a social security agreement which does the same for social security purposes. EEA countries and Switzerland, for example, have a multilateral social security agreement. Many companies nowadays hire remote workers, and many others accept that their employees start working abroad.
In the event that the Spanish tax office becomes aware of the situation, it will issue tax assessments on the company. The tax rules do not allow UK tax paid to be set off against Spanish corporation tax, so an application has to be made to get UK corporation tax repaid but, in the meantime, Spanish tax has to be paid. It could easily take a year or more to sort out the mess and it would be expensive in terms of advice needed in the UK and in Spain. Social security needs to be considered entirely separately from income tax. Even if you are not taxed overseas, you may still be liable to pay social security contributions there. It is also possible to continue to be liable to UK social security even where you are taxed overseas and not in the UK.
Contracting compliantly in Spain
That is the first step, finding a stable source of income. Even though we said that the cost of living in Spain is more than affordable, our advise is not to risk it and enter into the country with the homework done. And that homework means having a job that enables you to work online. What does it make Spain the perfect spot for remote workers? Let us give you 5 reasons so you will be convinced forever.
If you’re a freelancer in the UK, you’ve likely heard of the “remote working” trend. It’s the term we use for a flexible, independent, and self-reliant way of working. The answer is yes, but you will have to take care of your taxes. I’m going to tell you about the best and the worst things about Spain as a digital nomad. I’ve been to Spain before and I have been traveling through Spain for many months now. I’ve always been interested in traveling and meeting new people.
Social security:
Teleworking is voluntary for both the worker and the employer. If one of the two parties wants to reverse the decision, this must be exercised according to the terms of the agreement between staff and the company. Within this agreement, the company and employee will also be able to modify the percentage of hours that must be worked in the office. If a business has a permanent establishment in Spain, then it is required to register for local tax on economic activity in the municipality where the premises are located.
The exchange must be done within 30 days after arrival in Spain. The requirements of a non-lucrative visa are easy to meet. An applicant needs to prove financial means of 27,115 EUR in a banking account and have a private health insurance policy. Mills & Reeve main site Details our services, sector expertise, lawyers and firm info. This is document is a very brief summary of complex legal provisions.
Like income tax, the starting point is to assume that you could potentially be liable to social security in the country where you physically carry out your work. To make sense of this, you should substitute ‘Contracting State’ with ‘the UK’, and ‘other Contracting State’ with the other country. The fact you might work for a UK employer, under a UK contract and receive your pay into a UK bank account doesn’t generally change that – though you will need to check the rules of the country concerned. Holders of the digital nomad visa will be able to pay tax at a special non-resident rate. The new scheme – which is due to begin in January – will offer foreigners a one-year visa to work for employers outside Spain while living in the country. The visa for digital nomads, the newly created residency that will allow you to work for a company outside Spain, as well as enjoying many tax benefits.
You will need this number when dealing with any official procedures in Spain. For example, this number is required to buy property, buy a car, pay for utilities under your name and pay taxes. Below are two main residence options available for non-EU remote workers in Spain.
Basically, we are British and currently live in the UK. My Husband has been offered a job in Spain which pays between £50,000-55,000 per year. Can you tell me how much tax he will have to pay on this please as we are trying to figure out whether we can afford to take this offer. A.) As an employee of any company working here in Spain you are required to have social security coverage in order to start work. Leaving aside the employment law issues, which may be what your employer is worrying about, the tax issues are twofold - your personal tax liability and the obligations of your employer.
Your visa sponsor will discuss the total sum you will need with your application, which will include the cost of any household goods that you will need. In Spain, you are required to pay taxes on your income, regardless of where you live. But there is no sales tax in Spain, so you do not need to worry about that. In the United States, you are required to pay taxes on your income, regardless of where you live. If you live in a state that has a sales tax, you must also pay the sales tax on any items you buy. If you’re planning to work for a Spanish company, you’ll need to apply for a residence permit.
Your employer submits your work permit application to the immigration office. You do not need a permit if you’re working in the audiovisual sector for up to 90 days in a 180-day period. Once approved you book an appointment and submit a D visa application with the Spanish consulate or embassy. Once approved, you book an appointment with the Spanish consulate or embassy and submit a D visa application. The Spanish company submits your National ICT permit application to the immigration office. You need a C-type EET visa if you’re carrying out permit-exempt work for up to 90 days.
If you have a family they can join you as dependants if the Spanish company is a large company. You should check with the Spanish authorities which you need before applying. Meet minimum salary requirements according to the relevant collective bargaining agreement and at least €40,077 for technicians and €54,142 for managers and directors . If you’re highly skilled and plan to work for a Spanish company for at least 1 year you can apply for an EU Blue Card. If you do not qualify for an EU ICT permit, you may be able to apply for a national ICT permit.
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