Living in one country and working in another. This is called professional nomadism and is becoming more and more common. However, beware of the tax rules, especially since Spain has not signed a telework agreement with France.
According to data from the Spanish Ministry of Economy, the pandemic has tripled the percentage of people teleworking, currently around 15%. Among these teleworkers there are more and more people living in a different location than that of the company they work for.
Foreign wages and Spanish quality of life
The case of these ‘professional nomads’ was not a problem when it was temporary, at the beginning of the pandemic, but when the stay is prolonged, the Spanish tax authorities may ask them for explanations.
“In determining where to pay income taxes, it is the residence that is taken into account, not the nationality.”
France has extended until 30 June 2022 the telework agreements with five of its neighbours in order to regulate the wages received in the case of a teleworking employment. Nevertheless, Spain has not signed it.
However, as François Blin, partner of Bové Montero y Asociados, points out, “in determining where to pay income taxes, it is the residence that is taken into account, not the nationality, as many people believe.”
If you are teleworking in Spain for more than 183 days, you will be considered by the Spanish tax authorities as tax resident in Spain, even if the salary comes from France.
Where is the tax residence?
To determine the tax residence, Article 9 of Act 35/2006 on Personal Income Tax (“IRPF”) establishes three basic rules: “If it can be proved – explains François Blin – that you reside in Spain for more than 183 days, you will be considered by the Spanish tax authorities as a tax resident in Spain, even if you have French resources.”
The second rule focuses on the location of the main core of economic activities or interests. Finally, residence will be presumed to be in Spain when the spouse and minor children reside there.
It is therefore essential to note the number of days spent in each place and to keep all documents, receipts, invoices that can prove the place of residence in case of conflict with the tax authorities.
Where must taxes be paid?
If it is established that the tax residence is located in Spain, the teleworker is considered an IRPF taxpayer and therefore has to pay this tax in Spain on his worldwide income, regardless of where the income is generated and the residence of the taxpayer (Article 2 of the same act).
Teleworking abroad: Consequences also for the company
This is where another problem arises. Just as taxation can become a puzzle for professional nomads, the consequences for the company can be serious, since in some situations it might be forced to pay taxes in Spain too. “We are receiving more and more consultations from companies on the issue of teleworking – stresses the partner of Bové Montero y Asociados – due to the potential problems of prospecting or recognition as a permanent establishment, whether in Spain or in France.”
A future law to attract digital nomads to Spain
At the end of December 2021, the government issued a bill known as the “Start-up Act”, aimed at encouraging highly qualified professionals from foreign companies to telework from Spain.
We are receiving more and more consultations from companies on the issue of teleworking
They will be provided with a one-year residency visa, renewable for another two years, and they will receive significant tax benefits (similar to the Beckham Act), such as a reduction in income tax. However, the act is not expected to be passed before the end of 2022.
WorkBay Platform in Malaga
While waiting for this act, Malaga launched the WorkBay platform in 2021, with the aim of attracting these professionals from all over the world who could telework and, at the same time, enjoy the quality of life of the Andalusian city.
Some countries already offer visas for digital nomads, with requirements that vary depending on each country’s legislation, in terms of length of residence permit, minimum income or tax benefits.
Via https://lepetitjournal.com/vivre-a-barcelone/teletravail-espagne-impots-337245
