Raymundo Larrain reviews Spain’s Digital Nomad Visa, a new type of visa which allows its privileged holders to pay no tax in Spain on income and assets abroad. The DNV is all about paying no tax.

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Article copyrighted © 2024. Plagiarism will be criminally prosecuted

Amanda busy at work from her new Marbella office

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of October 2024

Introduction

Do you fancy living in Spain but paying fewer taxes (or even none at all)?

Are you a high-earner, or have a sizeable estate abroad?

Are you able to relocate and telework from Spain?

If the answer to all three is yes, the DNV should be top on your radar.

What is a Digital Nomad Visa?

The DNV is a residence permit granted to non-European nationals on teleworking from Spain.

It requires you to either be hired by a foreign employer or be a freelancer.

This visa allows applicants, and their dependants, to live and work in Spain.

Tax benefits of a Digital Nomad Visa

The DNV is the first of a new generation of visas which aims to attract high-rollers to Spain. Spain saw the wild success of the UK’s popular non-domiciled tax scheme (geared towards UHNWIs) and decided to copy it. First, it came up tentatively with Beckham’s Rule in 2015 (only aimed at EU nationals), and then decidedly in 2023 it expanded its tax benefits to all non-EUs through its Digital Nomad Visa program.

Needless to say, the main outlier of DNVs is that you pay little to no tax. No other Spanish visa offers these superb tax advantages collated below.

This is of particular interest to HNWI, or UHNWI, who are being overtaxed in their home countries.

The DNV allows you to relocate to Spain and pay a testimonial tax rate on personal income earnings.

It has associated multiple tax benefits:

• All income derived abroad goes untaxed by Spain.
• All assets located abroad go untaxed by Spain.

In other words, any source of worldwide income or assets are tax-exempt (just like with the popular UKs non-dom tax scheme). The only exception is any income derived abroad from working.

• DNV holders only pay tax strictly on the income they derive working remotely in Spain for a foreign employer. They will pay a flat tax rate of 24% on the first €600,000 of gross annual earnings over a five-year period. This translates into tax savings of 50%, or more, on income you earn strictly in Spain
• You are not required to file a 720 tax return (unlike Spanish tax residents)
• You are not required to file Wealth Tax (unlike Spanish tax residents)
• You can request to defer tax payments on the first and second year, without attracting penalties or delay interests being rolled on top (as is standard)
• For the purposes of other tax agencies, you will be tax resident in Spain.

Example of a DNV holder

Amanda Hollingsworth is the CEO of a young and upcoming AI company. She holds £8mn in savings and investments. She owns two rented properties in London, one in Paris, and a penthouse in New York adding a further £21mn. Amanda believes she overpays tax in the United Kingdom and decides to explore new options to pay less tax.

The nature of Amanda’s job allows her to relocate to Spain and telework from there, commuting unfettered to the UK – or elsewhere – as many times as she sees fit. The Company’s Board decides to reward her with a £400k wage packet on working from Spain.

If she attains a DNV in Spain:

• The £8mn she holds in savings & investments would go untaxed by Spain.
• The £21mn property portfolio she holds abroad (London, Paris, and New York) would also go untaxed by Spain.
• The rental income she derives from her two rented properties in London would also go untaxed by Spain.
• The only tax she would be subject to in Spain is personal income tax on the £400k she earns. Normally – as a Spanish tax resident – she would be subject to a top marginal rate exceeding 50%, but because she holds a DNV, she only pays a flat tax rate of 24% on her gross annual earnings, saving over 50% in personal income tax!

In view of the above, Amanda concludes she can greatly mitigate her tax bill by applying for a DNV and relocating to Spain.

Barcelona, Costa del Sol, Granada, Madrid, Malaga, Mallorca, Seville and Sotogrande; so many great places to choose from.

What is better, to apply for a DNV from a Spanish consulate or from Spain?

You can apply for a DNV either from a Spanish consulate in your home country or from Spain (through us). However, the time frames, visa duration, and general support provided are indeed very different. In the below chart you can clearly see the advantages of applying through us from Spain in lieu of a consulate:

Requirements to attain a Digital Nomad Visa in Spain

Core criteria you need to meet to apply for a DNV

1. You are employed (or self-employed i.e. freelancer) by a foreign company
2. You have a work contract (12 months, or more) from a foreign company that allows you to work remotely in Spain i.e. telework
3. You have been working for three months, or more, for this foreign employer.

 I. General staple requirements (apply to all Spanish visas)

1. You are a non-EU national.
2. Hire private health insurance from an approved Spanish health provider, or
3. Enrol in the Social Security
4. Clean criminal record (no live trace) on the previous 5 years.
5. Not be already in Spain illegally at the time of making a visa application.

II. DNV specific requirements

1. You need to prove you are hired by a foreign company. You need to have been working for this employer at least 3 months prior to making a DNV application. A work contract is the core requirement (12 months, or more). A copy of your job contract is required. Alternatively, if self-employed (freelancer), a letter from the company and company records proving it has been operational for more than 12 months.
2. You need to supply a copy of holding formal academic qualifications i.e. a university degree, business school, or professional qualification, or
3. alternatively, you need to prove you have at least 3 years of work experience in the job position you are being hired for.
4. Not to have resided in Spain during the previous 5 years of making a DNV application (e.g. a holder of an existing Golden Visa would be excluded).
5. Not to obtain income from a permanent establishment in Spain.

Digital Nomad Visa application procedure

1. Collate all the necessary documents
2. Electronic visa application is submitted to Madrid
3. Visa is granted
4. Attain a biometric residency card

How long does a DNV take to attain?

Through us, under 3 weeks.

Conclusion

If you are a high earner, or simply a very wealthy individual, and don’t fancy paying much tax, you should look into a Digital Nomad Visa.

DNVs offer unique tax advantages that no other visa can hope to match, including the coveted Golden Visa.

Some clients don’t even care about the visa, all they want is to pay 90% less tax. And the DNV allows it. If done right, DNVs can be wielded as a powerful tax-mitigation tool at the disposal of non-EUs. Why overpay tax?

At LNA we assign you a visa agent who will guide you throughout the whole application procedure, cutting through all the red tape. This saves you time, money, and aggravation.

LNA attains a DNV in under 3 weeks.

Our multidisciplinary team at Larrain Nesbitt Abogados (LNA) has attained hundreds of visas over the last decade for our non-EU clients.

Your family’s success is only one call away.

LNA has a 100% track record of attaining Spanish residency

Larraín Nesbitt Abogados, small on fees, BIG on service.

At Larrain Nesbitt Abogados (LNA) we have over 21 years of experience specializing in immigration & residency visas. We also assist clients in buying, selling, or renting properties in Spain. You can contact us by e-mail at info@larrainnesbitt.com, by telephone at our UK line (+44) 0754 3838 218 or Spanish line (+34) 952 19 22 88, or by completing our contact form.

Residency services available from LNA:

• Digital Nomad Visa (Tax-free visa)
• Golden Visa Service (Investor Visa)
• Non-Lucrative Visa (Pensioner’s Visa)
• Lucrative Visa (Business Visa)
• EU-Family Regroupment (Marriage Visa)
• Non-Domiciled Tax Scheme (Beckham’s Rule)
• Spanish Residency permit for EU nationals

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author will result in criminal prosecution. Ní neart go cur le chéile. VOV.

Larraín Nesbitt Abogados, small on fees, BIG on service.
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