Spain: a tax haven for digital nomads and startups? Let's look at who benefits from what
- Anastasia Maslo
- Oct 5, 2024
- 2 min read
Updated: Oct 7, 2024
¡Hola, amigos!
We often help entrepreneurs and digital nomads to understand the intricacies of taxation in Spain. This sunny country offers attractive conditions, but it is important to choose the right residency regime. Who is suitable for a digital nomad visa and who is suitable for an entrepreneur's residence permit, especially in terms of taxes?
Digital Nomad Visa
Freelancers, online entrepreneurs working for companies outside Spain
✅ Tax perks:
Single income tax rate of 15%: For the first few years (usually up to 5 years) you will pay income tax at a reduced rate of 15%, regardless of your income level. This is much more favorable than the standard progressive scale, which can be as high as 45%.
⛔ Tax disadvantages:
Need to prove financial solvency: To get a visa, you need to prove that you have enough money to live in Spain.
It is illegal to work for Spanish companies. Here's how it works:
You are allowed to earn up to 20% of your income from Spanish clients or companies.
If you start working for a Spanish company above this limit, even temporarily, you may lose the tax benefits of your visa.
You will then be obliged to pay taxes under the Spanish general system, which means higher tax rates and fewer tax benefits compared to the favorable tax conditions provided for the digital nomad visa.
Entrepreneur's residence permit
Entrepreneurs ready to start a business in Spain
✅ Tax perks:
Minimum taxes at the start: At the start, you will only pay fixed social contributions as an autónomo (self-employed person). This can be advantageous if your business is not yet generating much income.
Potential tax benefits: Spain has tax incentives for startups and innovative companies that can reduce your tax burden in the future.
⛔ Tax disadvantages:
Standard income tax rate: Once your business starts generating substantial income, you will pay income tax on a standard progressive scale (up to 45%).
Social contributions: Even if your business is not profitable, you are still obliged to pay fixed social contributions.
Other taxes: Depending on the type of business you have, you may also be liable to pay VAT and other taxes.
Conclusion: who is suited for what?
Digital Nomad Visa: Ideal for those who are just starting out in Spain and want to take advantage of the low tax rate in the first few years.
Entrepreneur's residence permit: Suitable for ambitious entrepreneurs who are willing to take a risk and start a business in Spain. The tax burden is minimal at the start, but as the business grows, you will have to pay more taxes.
❗¡It's important!
Spanish tax legislation is complex and subject to change. Before deciding on the type of residency, be sure to consult a tax professional to choose the best option for your situation.
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