Contractors' Questions: Is a Digital Nomad Visa for Spain open to limited company directors?

Contractor’s Question: I’ve read that the Spanish government is set to offer a new visa scheme that will let Britons working from home in Spain -- for UK companies -- pay half the usual levy. Is that too good to be true, or was it a misprint? And would limited company contractors be eligible, if such a scheme is to go ahead?

Expert’s Answer: It is neither too good to be true, nor a misprint! But we need to be a little cautious.

That’s because while the Spanish Congress of Deputies did indeed recently approve what’s being termed the new ‘Start-Ups Law’ (due to its friendliness to start-ups) we currently only know some of the details.

Not a complete picture

Partly, not knowing every detail is because the law is not set to take effect until January 2023. But yes, part of the proposal is to create a new Digital Nomad visa, which is to operate alongside the existing Non-Lucrative Visa.

For your reference as to whether the digital nomad visa sounds applicable to you, the Spanish Secretary of State for digitalisation and artificial intelligence, Carme Artigas, said the hope was that the digital nomad visa would entice talented Britons to make their home in Spain. 

'Greatest wastes'

“Many British people who are here or who have second homes here can work here [with the proposed visa] for their [UK] companies. But also, we want to attract many talented Britons,” she said in an interview. 

Artigas added: “Perhaps one of the greatest wastes of Brexit was for Europe to lose a part of its [British] talent.” 

To qualify for the Digital Nomad Visa from Spain, you will have to have a foreign employer; not derive more than 20% of your income from Spain, and not previously lived in Spain. 

Minimum income threshold: TBC

At the time of writing however, we are unsure of the minimum income level for the visas. We have seen reports of both ‘€2-3,000 per month’ and ‘the Spanish national minimum wage’ being the threshold. Our expectation is that the government will set the minimum income you can have to obtain a Digital Nomad Visa for Spain at the €2-3,000 range, rather than the lower one. 

In common with most digital nomad visa programmes we have seen elsewhere, Spain’s visa will be for an initial year -- with the possibility of extensions and probable scope to lead to a residence visa and, potentially, a Spanish passport. Still, we will have to wait for the law for a definitive answer, procedurally. 

Spain's Digital Nomad Visa is a boon for limited company contractors

Overall though, the Digital Nomad Visa being offered by Spain looks like excellent news for Britons like you, including those who have a UK-registered limited company. You will need to draw the minimum income as a salary, when we know what that figure is. The Start-Ups Law also will allow corporation tax in Spain to come down a notch for foreigners, making Brits with a business one of the demographics that will benefit the most from the new visa programme. The rate on profits will be 15%  -- instead of 24% -- for up to four years.

In addition, applicants for Spain’s Digital Nomad Visa will have the opportunity to enjoy non-resident income tax (‘IRNR’). Previously, you had to show you had not lived in Spain for ten years, but thanks to the Start-Ups Law, this will be reduced to five years, but the benefits will run for ten years. The great advantage is, as you’ve heard, that a Briton like you will be potentially eligible to pay tax on more favourable terms than the Spaniards. For example, you will likely pay only 15% tax on income up to €60,000, instead of 24% (which Spaniards would typically suffer). 

Not only tax treats

So from a date in January 2023 – that’s next month believe it or not, Spain will join the list of countries vying for Britons and other talented non-Spanish residents to go and live and work in-country. It’s probably not news to you but in Spain, you can live in the sunshine for 3,000 hours a year, enjoy a much lower cost of living than in the recession-mired UK and now, thanks to the Digital Nomad Visa, benefit from more favourable tax treatment. Hola, Espana!

The expert was Kevin Austin, managing director of overseas working advisory Access Financial.