What is the digital-nomad visa scheme, as Spain introduces it?

Spain is the latest country planning to roll out a “digital nomad” visa scheme, giving Britons and other non-EU citizens the opportunity to work remotely in the sun and benefit from lower tax rates.

The new visas will be available to people working remotely for companies outside of Spain and who earn a maximum of 20 per cent of their income from Spanish firms.

The scheme is only open to applicants from outside the European Economic Area who can demonstrate that they have been working remotely for at least a year. British citizens fall under this category as the UK is no longer an EU or EEA country following Brexit.

Applicants must have a contract of employment or, if freelance, be able to prove they have been regularly employed by a non-Spanish firm.

As the law is still being drafted, some specifics are yet to be confirmed. However, it is thought that the visa will initially be valid for one year, and subsequently renewable for up to five years. Close relatives, including spouses or children, will also be able to join as part of the scheme. It is also thought that Spain will set a minimum monthly income of €2,000.

Applicants will also enjoy tax breaks: rather than paying the standard 24 per cent base rate tax, they will only pay 15 per cent for the first four years.

Spain is one of at least eight other European countries that have rolled out versions of the digital-nomad scheme.

Spain’s Economic Affairs Minister Nadia Calviño said that “the digital-nomad visa will attract and retain international and national talents by helping remote workers and digital nomads set up in Spain.”

What is a digital-nomad visa?

A digital-nomad visa is an authorisation to work remotely in a foreign country for an extended period of time.

It allows for longer stays than a tourist visa, and sometimes offers incentives, such as tax breaks.

A digital-nomad visa allows its holder to work during their stay in a country provided they do not enter the local job market. The idea is that they do not compete for jobs with residents, but rather work independently for local employers. The only exception is Estonia, which allows limited local work as long as the person’s main purpose continues to be remote working.

Which countries have digital-nomad visa schemes?

Estonia was the first country to implement a visa specifically for digital nomads, and many have followed suit.

There are currently 42 countries offering the scheme, including Croatia, Portugal, Cyprus, Italy, Thailand, Greece, Germany, Indonesia, Barbados, Dubai, Saint Lucia, Mexico, the Bahamas, and Malta.

Within the EU, people with EU passports or arriving from Schengen countries can already work remotely in the country for less than six months of the year without needing to register.

What are the requirements for obtaining a digital-nomad visa?

Each country has its own set of eligibility conditions for digital nomads.

Most digital-nomad visas are open to any foreign nationals who are working for a company based overseas. Some also allow the self-employed, freelancers, or students to apply.

The main criterion is proof of income, with every country setting varying standards. In Greece, applicants must prove they have a monthly income of €3,500. In Croatia, the minimum is €2,300, in Estonia it is €3,500, in Iceland a whopping €7,100, and in Portugal only €700.

Some countries also require that you have savings – €5,500 in the case of the Czech Republic – as well as income. Others may also insist an applicant has private health insurance.

Are there tax incentives offered?

Digital-nomad visas are one way for countries to recover lost tourism money due to the pandemic. For this reason, some countries have introduced incentives to attract remote workers to their schemes.

In Croatia, for example, digital nomads benefit from a total exemption from taxes in the country. To be eligible, you just need to obtain a one-year digital-nomad residence permit.

In Italy, self-employed workers who become Italian tax residents and commit to staying for at least two years benefit from a 70 per cent tax exemption on all income generated in the country. Greece has a similar offering, and in Spain, digital nomads will be taxed at 15 per cent for the first four years, compared to the standard 24 per cent base rate.