In today’s mobile era of remote working, digital nomads often ask where they pay taxes. Are they liable for income tax in Spain or elsewhere as residents or non-residents? In this article, we look at the factors that determine where digital nomads in Spain pay taxes.
Read all about the Spanish digital nomad visa
Digital nomads living in Spain fall into one of three categories according to Spanish legislation. In turn, this category determines where they pay taxes.
Living in Spain for at least 183 days a year
Anyone who stays in Spain for at least 183 days in a calendar year is considered a tax resident. As a result, they are liable for income tax in Spain.
Digital nomads in Spain who live in the country for at least 183 days a year may be asked to prove this status to the tax authorities or show they have been absent. It’s important to keep track of the days you are outside Spain and have proof of your absence, for example, travel tickets or a rental contract.
Having essential interests in Spain
If digital nomads in Spain don’t fulfil the 183-day criteria, the tax authorities look at other factors. For example, if you have essential interests in the country (intereses vitales in Spanish). They include a partner and/or children living in the country.
Even if you don’t spend 183 days a year in Spain, but your partner and/or children do, the Spanish tax authorities will consider you a resident. As a result, you’re liable for income tax in Spain.
Find out about long-term visas in Spain
Having financial interests in Spain
The third criterion that is also used for determining fiscal residence is your financial situation and your assets. The Spanish authorities consider you a tax resident in the country if most of your assets are in Spain. These include property, a car and bank deposits.
For example, if a digital nomad spends most of the year outside Spain, has no partner and/or children living in Spain, but owns assets in the country, they are tax residents in Spain. Consequently, they must pay income tax.
What happens if a digital nomad spends time in several countries?
By definition, digital nomads move around, and it isn’t uncommon for them to live in more than one country during a calendar year. In this case, all the countries may claim that the digital nomad is a tax resident and levy similar taxes. This situation is known as a double imposition and is usually rectified by double-taxation treaties.
However, there are two important factors to bear in mind in this situation:
- Not all countries in the world have double-taxation treaties in place with other countries. It’s therefore worth taking professional advice to avoid paying the same amount of tax in two or more countries.
- Spain considers some countries, such as Gibraltar and Monaco, offshore locations. As a result, if a digital nomad in Spain moves to one of these countries, they must continue to pay income tax in Spain for the rest of the calendar year and the following three years. This rule applies even if the digital nomad can prove they no longer live in Spain.
Get professional advice
Tax matters are complex in any country, so we advise getting expert advice on your fiscal situation. Obtaining professional help will ensure you meet all your tax obligations and avoid paying too much tax.
At Costaluz Lawyers, we have a team of tax advisors specialising in taxation for foreigners and digital nomads in Spain. Get in touch for a free consultation now.
Maria Luisa Castro
