By Oriol Molas
On November 3rd, the lower house of Spain’s Parliament, the Congreso de los Diputados, finally approved the Startups Law, a piece of legislation originally proposed in 2019. The law, which is expected to come into force once the Senate ratifies it in January, ushers in a range of tax benefits for investors and entrepreneurs and will include measures to attract and retain digital talent, favoring the establishment of international remote workers – i.e., digital nomads – in Spain.
What will the new “Digital Nomad” visa look like?
The new visa category for digital nomads, which is open to any nationality, is aimed at those who want to work remotely for companies based outside of Spain. Also, those who carry out a professional activity (independent of a particular employer) will be allowed to perform a maximum of 20% of their professional activity for a company located within Spain.
The initial digital nomad visa will be valid for a maximum period of one year, whereupon the applicant will be able to apply for residency (once they have arrived in Spain) with a maximum validity of three years. That residence permit is renewable for periods of two years thereafter. The law, additionally, offers a special tax regime to digital nomads, who would be taxed at IRNR (non-resident income tax) rates rather than by IRPF (resident income tax) rates.
For example, companies that qualify as startups will enjoy a reduced corporate tax rate of 15% (compared to the 25% that generally applies to corporations), while individuals who work mostly for foreign companies while living in Spain (what Spain considers digital nomads) will enjoy a flat 15% personal income tax rate.
How will this affect the other residency visas?
A change that will affect the Non-Lucrative residency visa is the proposed modification and simplification of how economic resources are evaluated. The new reference figure for its approval will be the Minimum Interprofessional Wage (SMI) instead of the IPREM, effectively lowering the income required to qualify for this type of visa.
One of the ways to obtain residency in Spain is by investing in real estate for a minimum value of €500,000, i.e., the Golden Visa. This authorization (regulated by Law 14/2013, of September 27, 2013) was created to support entrepreneurs and their internationalization and allows holders to live and work in Spain and to travel freely in all the countries that make up the Schengen area.
The proposed new law will mean unifying the application for residence authorization and the visa in the same instance by processing them consecutively. Likewise, it simplifies the issuance of the Foreigner’s Identity Number (NIE), an essential document for those applying for residence authorizations. Regarding previous documentation, it limits the request for the criminal record certificate to the countries where the applicant has resided in the last two years instead of the five years currently requested.
In addition, the validity of initial residence permits will be extended from two to three years.
None of these proposed changes will take effect until the law is passed in the Spanish Senate (which is expected to happen in the next few weeks), but it is worth noting that while many European countries have announced measures tightening their residency laws, Spain has chosen to improve and expand its program, making it one of the best options for obtaining residency in Europe.
Oriol is an economist licensed by the Pompeu Fabra University of Barcelona and holds a Master Degree in International Business from the same University He has more than 18 years of experience in leadership and business projects implementation as well as financial and legal analysis of operations linked to real estate investment. Oriol is the Managing Partner of Orience International.