British “digital nomads” are set to be offered huge tax breaks to work from home in Spain.
Madrid is planning a new visa programme that will allow people working for British companies while living in Spain to pay almost half as much tax as Spaniards.
British workers lost their automatic right to live, work and study in EU countries after Brexit but could now be tempted to flee the UK – which faces years of high taxes, recession and unaffordable housing – for sunnier climes.“This is not about bringing in people like tourists. The aim of the digital nomad scheme is to accelerate the processes of knowledge transfer in Spain because talent attracts more talent,” Carme Artigas, the secretary of state for digitalisation and artificial intelligence, told The Telegraph.
Ms Artigas denied that Spain was trying to poach talent by fiscal dumping but said it wanted to change the business culture in the country and accelerate its transformation into a modern digital economy.
Qualifying takes no longer than a month
Remote working became more common during the pandemic and a number of countries have set up schemes to attract the growing population of digital nomads, whose jobs allow them to work from anywhere – but Spain has long been one of the most popular destinations for British expats.
The new scheme – which is due to begin in January – will offer foreigners a one-year visa to work for employers outside Spain while living in the country.
After the first 12 months, they will be able to gain residency for up to five years or, in some cases, the permanent right to stay in Spain.
Qualifying for digital nomad status will take no longer than a month. Applicants must prove they can work completely remotely for an employer based outside Spain and that they are qualified professionals – but they only need to earn a minimum of £860 a month, the same as Spain’s minimum wage.
Holders of the digital nomad visa will be able to pay tax at a special non-resident rate.
That will be levied at between 23 and 26 per cent on medium and high incomes, compared to between 30 and 45 per cent under normal Spanish income tax rules.
There is also no risk of British workers being charged for tax in the UK because of a bilateral double tax treaty agreed between London and Madrid in 2014, which was not affected by the UK leaving the EU.
The scheme forms part of what Madrid says is the world’s first dedicated package of legislation for technology start-ups.
Scheme to encourage tech companies to set up shop in Spain
The main thrust of the legislation is to encourage tech companies to set up shop in Spain and encourage angel investors to back start-ups.
Digital activity now represents 22 per cent of the total output of the Spanish economy. The Spanish government wants this to increase to 40 per cent by 2030.
Entrepreneurs and investors are being offered three-year renewable residency permits if they can prove they want to set up a new company.
Investors can also qualify for a 50 per cent deduction in tax on any investments they make in Spain-based start-ups.
Start-ups, defined as companies less than five years old and with a turnover of under 8.5 million euros, can be registered at a one-stop shop for just £85 if their activity is considered to be innovative enough.
Those companies will also be able to pay a lower rate of corporation tax – at 15 per cent instead of the standard 25 per cent – among other tax breaks.
Meanwhile, a new one-year internship residency visa is planned to attract foreign academic talent.
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