Oliver Heslop, founder of Global Expatriate Tax Services (GETS) and Expatriate Tax Services London Ltd, is a highly experienced UK tax specialist dealing with expatriate cross border issues. He is also the official Expat Focus UK Taxation partner and is available to answer readers’ UK tax questions. In this article, Oliver writes about new tax advantages for digital nomads in Spain.
Question: Are there new tax incentives to encourage UK nationals to live in Spain? Especially the digital nomad? Absolutely.
We will summarise them below and their great appeal. Let’s take a brief tour of issues related to living in Spain.
The old image
When I first thought of British expats based in Spain, I thought of English greasy spoon cafés, which sprang up in the 70’s, English pubs with karaoke and other imported British and Irish “treasures”. Now, we should really strike out this paragraph, because Spain as a whole is so different to (and much better than) this. This article will highlight some positives of moving your life to Spain (and the new tax breaks).
The true Spain
Spain as a destination for UK expatriates is so much more than chips and cheap ale. Did you know that Spain has 47 UNESCO World Heritage sites, and it is only Italy in Europe which beats this number? A visitor to Spain will be delighted with world-class mountain climbing, gorgeous long beaches and palaces, castles and endless variety. My impression of the Spanish is a very open, welcoming, tolerant people who have no issues (~90% of those surveyed) with gay marriage and the important agenda of transgender rights. Catholicism is less dominant than it once was.
The festivals
My friends in Barcelona tell me there is never a dull moment in this country. We all know about the chance to be chased by bulls, but La Fallas festival is definitely one to check out. It involves effigy burning, which the UK only saw after a David Beckham red card once. La Fallas goes way beyond that, with its large statue burnings.
The long-living Spanish
Let’s briefly look at the demographics of Spain. Regarding the older population and tolerance towards the aged, Spanish people have a high life expectancy (indeed, only Japan has a higher life expectancy around the globe). The life expectancy of Spanish women is 85, compared to 79 for men. I will be making no jokes about men not hanging around.
By 2050, it is estimated that 30% of their population will be over 60. One of the largest percentages of that age group in the world. And, despite rumours to the contrary, Spain is the number one producer of olive oil in Europe, and we’ve no doubt that this can boost the long life expectancy.
Let’s now examine Spain’s new visa program for 2023 and return to tax.
New Spanish visa – competing with Portugal on tax breaks?
In January 2023, the following Spanish scheme is to be introduced:
- A visa for people who wish to live in Spain and work remotely for their foreign or non-Spanish employer
It’s a 12-month visa initially, then the applicant can gain residence for up to five years. These changes reflect Spain’s desire to accelerate exchange of knowledge/skills, to attract also UK digital nomads who may be deterred post-Brexit.
The tax breaks seem fantastic, with a special rate of 23-26% income tax rate, as opposed to the standard rate of 30-45% under normal rules.
What’s a digital nomad?
A quick refresher on this one.
The nomad aspect of the phrase refers to the person who is now able (and happy to) work remotely in other countries; to carry out their work for a eg UK employer or UK client. There may be an NHS marketing team whose line manager is UK-based, but they become 100% Spain-based workers.
The full digital nomad phrase refers to those perhaps whose skills are based in IT, internet, and the digital world. That is Spain’s target group. However, as a tax accountant, I can also work remotely and provide all services online. All of my product is digital, and we might hope that certain advisers are covered. I would be happy to be a test case!
If there are any crypto traders who want to discuss their status, please contact me.
Other benefits of Spain’s new tax offerings
The UK Spain tax treaty would prevent the UK from attempting to tax this income as well, which means a top tax rate of 26% (ESP) rather than 45% (UK). This visa can lead to ESP permanent residence if the applicant wishes.
Other recent great tax breaks in Spain:
- If an entrepreneur is setting up a new company, he or she can obtain a three-year renewable residency permit
- Investors in Spanish start-ups can claim a 50% tax deduction on their investment
What are Spain’s objectives?
They want tech start up and angel investors to choose Spain. Their digital economy is 22% of economic output, and the objective is to double it by 2030. That is an aggressive growth target, but having seen the changes in Portugal, tax incentives can radically change an economy in one decade.
Who are my colleagues in Spain?
I have two tax firms of colleagues in Spain who are essential to us. I have good grounding in Spanish taxation, but their help and tax planning is invaluable. For Brits leaving the UK, an individual needs support “closing down” UK tax matters, but also tax services post-arrival in Spain. My best contacts are: Francesco Bertagnin, an Englishman, in Andalusia for 22+ years (highly skilled and very helpful) and Almudena Soler in Madrid, who writes content for us (very likeable and accomplished).
Readers who would like to contact Oliver may do so through the enquiry form here.