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Spain’s new “digital nomad visa” is trash, but there are other options in Europe

Digital nomads have been left disappointed by Spain’s new visa, but it’s not the only European country competing to attract the new generation of remote workers

By Tim Smith in Barcelona

Marie Tuason, working for a German medical company from the Portuguese island of Madeira, is your typical digital nomad. 

After a day at her laptop the biomedical engineer originally from the Philippines will either join an evening yoga session, a salsa dancing class, or maybe some ocean kayaking.

She’s part of the Digital Nomads Madeira project, touted as Europe’s first digital nomad village. 

Developed in partnership with the regional government, the initiative offers access to a community slack channel, free high-speed wifi and working space, all with sea and mountain views on the Portuguese volcanic island.

A die-hard surfer, she’d been planning on moving on to Spain’s Canary Islands next, in search of better waves, and was excited when the Spanish government announced a new “digital nomad visa”, designed to attract remote workers to the country.

But, as the details have emerged, she’s been left disappointed.

Double taxation

The visa looks good at first glance. It allows people working remotely for overseas companies to come to Spain for one year, and then extend for a second year, via a residency permit. 

The catch? Remote workers will have to pay 24% income tax for their first 183 days in the country, and if they stay longer their tax rate will be decided using double taxation agreements.

This doesn’t compare well to other European schemes to attract digital nomads. Of the six new digital nomad visas to appear on the continent, Spain’s is the only one that will fully tax people right off the bat (more details below). Meanwhile, Portugal’s D7 residence programme, which has been around since 2007, allows tax exemptions for most foreign income.

“Wow, that is totally different from what I thought,” she said, reacting to the detail. “I mean of course it’s less attractive. I’d rather go somewhere else rather than stay in Spain and pay double tax.”

Spain digital nomad visa
Marie Tuason in her temporary home of Madeira

Ana Marie Ghita, another digital nomad staying at the Digital Nomads Madeira project, feels the same: “The 24% tax doesn’t seem that attractive. I think Spain has huge potential in attracting digital nomads… It would be a pity for them to miss out on the opportunity of attracting people.”

It’s not that digital nomads like Tuason and Ghita don’t want to pay any tax at all. Most people in this worker category will pay full tax as a freelancer in their permanent country of residence. 

To avoid getting taxed twice, most tend to rely on tourist visas to travel, generally lasting 90 days in Europe, to avoid having to pay double taxes.

“Generally they’re all trying to skirt the taxes. So if they can move and not have to pay any taxes, then, you know, that’s kind of their mindset,” says Dave Williams, co-founder of NomadX,  a digital nomad accommodation and community platform. 

“I would like to see the taxes only address locally originated income. At the moment, it’s super important for countries to court the nomads, not only through strong tax incentives but through public and private sector community-first initiatives.”

Spain digital nomad visa
Dave Williams co-founder of NomadX

A new breed of “digital nomad” employees?

While Spain’s new visa might not be particularly attractive to the typical digital nomad, there are indications that the pandemic is changing our understanding of the term.

Gonçalo Hall is the founder of the Digital Nomads Madeira project, and says he has noticed a change in the profile of people joining his community.

“Before Covid I’ll say full-time employees were less than 10%, and they were a bit bullied inside the community because most of them were freelancers and business owners,” he explains. “Now in my data, we have more than 50% of people staying that are actually full-time employees. That’s a lot of people.”

Gonçalo Hall, founder of the Digital Nomads Madeira project

If the remote working revolution isn’t snuffed out as bosses demand their staff return to the office, there’s a chance that this new breed of digital nomad will be more inclined to stay for longer at their destinations. 

This could be a welcome change for locals who believe digital nomads don’t contribute to the community they’re residing in. 

Last year, Barcelona-based housing activist Martí Cusó told Sifted that he blamed digital nomads for pushing up property prices, without meaningfully adding to the city: “Only spending two months a year [in a place] is not growing roots and generating community.”

But could the effect be more positive in places where rising property prices and overpopulation are less of an issue?

A recent piece in Wired explored the potential for digital nomads to rejuvenate Spain’s depopulated rural towns and villages, which have hugely suffered from mass urbanisation in recent decades.

Nacho Rodríguez, founder of Canary Islands-based remote work community Repeople, says he’s already seen the benefits that digital nomads have brought to the area.

“The key here is to integrate and not create bubbles,” he says. “The opportunities that these high-skilled individuals bring – once you connect them to the community and make sure that they share knowledge and share opportunities – are nowadays very important.”

Other options

Spain isn’t the only country to have launched a “digital nomad visa” in the wake of the pandemic. Other countries that are particularly reliant on tourism have also been jumping on the trend.

The first was Barbados in July 2020, and while it might have seemed like a great deal for a slice of Caribbean paradise, many were put off by the application fee of $2,000-$3,000.

A number of European countries are now also offering visas for digital nomads who want to extend their stay longer than six months. We’ve looked at the options and their various requirements, to see how they stack up against each other

Croatia

Croatia launched its digital nomad visa in January, and allows successful applicants to stay for a year, and can be extended for a second year.

The requirements include a government issued background check from your home country, proof of health and travel insurance, proof of a Croatian address, and proof that you’re a digital nomad.

Applicants must be able to prove they earn at least €2,261 per month, but will not be taxed by Croatia.

Greece

Greece’s new digital nomad visa is still in the making, but was tabled as a bill in parliament in late August. It will allow people working for foreign employers to stay for 18 months.

Digital nomads will need to prove they’ll be in work for the duration of their stay by producing an employee contract and make a declaration that they will not work for Greek employers.

The minimum income requirement is €3,500, and it’s thought that only 50% of that income will be taxable.

Estonia

Estonia launched its digital nomad visa in August 2020, and the new scheme allows successful  applicants to stay for a year. 

They’ll need to prove a monthly income of €3504 per month, and must be self employed or working for a foreign company. For the first 183 consecutive days in the country, digital nomads will pay no taxes, after that they’ll be considered Estonian tax residents.

Iceland

Iceland’s digital nomad visa, announced in November 2020, is perhaps the least attractive of the bunch, with an income requirement of 1m Icelandic Krona, more than €6,600 at current rates.

There’s also a $83 application fee, and successful applicants will be able to stay in the country for up to six months and pay no local tax.

These are Europe’s newest options for digital nomad visas. But other countries have existing visa and residency options, which are well covered in this blog from Expert Vagabond.

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Luca Arrigo
Luca Arrigo

This is a fantastic article on the Portugal Visa.

I’ll be putting it into practice over the coming months.

Thank you!

https://nomadvisamalta.com/nomad-visa-portugal/

Digitalnomad
Digitalnomad

Please provide a link to the new law

Jonathan
Jonathan

Unbelievable! A country that wants to be stable and collect taxes from people who live in the country. Spain is doing the right thing. Portugal’s economy is in such a bad shape. And I’m Portuguese. A digital nomad that comes to Spain for few months doesn’t contribute to the country in anyway – not taxes, not to the economy or the locals. There are no roots in Digital Nomadic lifestyle. This is the whole purpose of nomadic lifestyle.

This article is so biased that it’s sad to read it.

Jonathan
Jonathan

and it’s wrong to say that you will need to pay taxes twice. Spain has treaties with many countries….to conclude – a very bad article.

Jonatan
Jonatan

Nomads pay tax on everything they buy in the country, its called sales tax and its 23% in Portugal. All the money they spend in the country benefits the nation hence enriching the country. But you want them to pay more even though they haven’t grown up in that country hence not used the social welfare, hospitals, roads, schools or anything. Where are the incentives in that? Nah, this is a narrow minded communistic approach that will yield the opposite effect that you’re after…

Steven Burns
Steven Burns

Yeah well, good luck getting those taxes. You ain’t getting a penny from me and I know a lot of us with say the same. “Doing the right thing” doesn’t work if everyone gives you the finger.

Samantha North
Samantha North

“Portugal’s D7 residence programme, which has been around since 2007, allows tax exemptions for most foreign income.”

That’s not entirely accurate. The D7 program itself doesn’t allow tax exemptions. But once the D7 holder is tax resident in Portugal, they can then apply for the (misleadingly named) “non-habitual residency” (NHR) status, which grants the preferential tax treatment.

Molly
Molly

There is no double taxation if you are a US resident. You get to deduct foreign taxes paid at the very least. Though now that I say that I’m not sure if they just don’t count as income or if they are a dollar for dollar deduction from your tax bill. Either way, talk to an accountant familiar with Ex-pat taxes before you write anything off.

luis
luis

that is true

Lindsay
Lindsay

I have looked into moving to Spain on a non lucrative, and this is my understanding, too. American remote workers’ total tax bill would be the greater of the two tax rates. Whatever is paid to Spain is deducted from your US tax bill…a double tax treaty ensures that individuals are not subject to double taxation. Being taxed at 24% is a boon for high earning remote workers who would otherwise be taxed at the highest end of Spain’s tax scale…if you are comparing this to true digital nomads who bounce from spot to spot every few months…and purposely avoid… Read more »

JLMS
JLMS

The Spanish visa will be available only to people working for startups, narrowly defined by the law (the same person can’t own shares in more than one startup for example), the law won’t allow people to work for companies established outside Spain, I don’t see this proposal as a digital nomad visa at all, it is more like a regular sponsorship scheme to benefit a very narrow subset of Spanish companies.

Santiago Perez
Santiago Perez

I don’t believe that’s accurate, what they are saying is that they are providing additional incentives for startups.

CatchMeIfYouCan
CatchMeIfYouCan

Spain has a double taxation treaty (2006) with the UK. So you shouldn’t be taxed twice!

CatchMeIfYouCan
CatchMeIfYouCan

All the above listed countries expect the nomads to earn too much. It’s a pathetic offer from each country

Lucy
Lucy

Really? Expecting $5,000 per month of gtoss earnings is too much?

matt
matt

yes

Matt
Matt

agree

Valerie Douglas
Valerie Douglas

I’m thinking of purchasing property in Europe to create a base for digital nomads and artists and writers and that sort of thing where would everybody suggest I create this. What nation will provide the best deals on purchasing property?
I’m a digital Nomad myself so I know what most people need to require and I’d also take into consideration the necessity of being able to be a contributing part of the community..

Ross Tomlinson
Ross Tomlinson

Portugal would be high up on the list. Relatively good weather. Cheap property prices. No income tax for 10 years. A lot of towns have fiber internet access too. Also due to the location solar for electricity is relatively cheap.

Jovan
Jovan

Ohrid, North Macedonia 🇲🇰
It’s cheap, it has a lake and an airport (although not many destinations are available)

Thomas
Thomas

Well, if monthly income requirements for nomads are relevant then check out Portugal’s Algarve cause 600€ per month seems gonna be ok compared to other countries what requires 4-6 times more.

Luca Arrigo
Luca Arrigo

Check out Malta’s nomad visa. It is definitely up there with the greats 🌊

Alex Pospekhov
Alex Pospekhov

Spain tax authority are one the most effective & hard in the world. They have state of the art IT systems and HUGE experience of mining pennies from the football superstars. Of course they will get all they want from you. BTW – check Latvia startup visa, also useful for nomads.