In recent years, Spain has become an increasingly attractive destination for expatriates and international professionals. Among the most popular options for those looking to relocate to Spain are the Digital Nomad Visa (referred from now on as –DNV-) and the potential application of the Spanish Special Expats’ Tax Regime (-SETR-), or The Beckham Law (referred from now on as –BL-), as is commonly known. However, there is often significant confusion between these two regimes, with many clients mistakenly believing they are the same. It is crucial to understand that while one focuses on residency (DNV), the other targets potential tax benefits (BL).
The Digital Nomad Visa –regulated in the Law 14/2013, of 27 September, on support for entrepreneurs and their internationalisation– is designed to attract professionals who work remotely and wish to establish themselves in Spain. It allows digital nomads to legally reside in Spain initially for one or three years (depending on where you have made your visa application), with the possibility of renewal for up to five years. Aimed at those who work for foreign companies or as freelancers, it enables them to perform their activities from Spain. Nevertheless, self-employed who work for a Spanish company are only entitled to the DNV if the earnings from this professional relationship are below 20% of their income.
Additionally, regarding one of the most common questions, which is whether it is necessary to stay in Spain for six months in the natural year to retain this visa; while there is no strict obligation to remain for six months, it is required to demonstrate that Spain is the primary base of their activities, which generally involves a significant stay in the country. Subsequently, as a precautionary measure, we recommend that the criteria followed be that the maximum time a natural person who is benefiting from the digital nomad visa regime can stay out of Spain is 6 months (however, only travelling outside of the European Union would count towards the period of absence -therefore, such time limit shall not apply to travels within the EU).
On the other hand, the Beckham Law –regulated by article 93 of Law 35/2006, of 28 November, on Personal Income Tax (IRPF)– focuses on providing tax benefits to expatriates who move their tax residence to Spain under specific conditions. Beneficiaries receive a preferential tax treatment, being taxed as non -residents for a maximum timeframe of 6 years, with a fixed tax rate on their income obtained in Spain (24% up to 600,000€, and the excess over this amount at 47%). Now, in terms of eligibility, individuals must not have been residents in Spain for the five tax years preceding their move to Spain. Additionally, the move must be a result of a new employment contract, assuming a directorial role (with conditions), engaging in entrepreneurial activities, or performing highly qualified professional services. The special tax regime applies not only to the primary applicant but can also extend to their spouse and children under 25 (or of any age if they have a disability), provided they meet specific residency and dependency conditions.
All thus being said, to maximize benefits and avoid legal issues, it is essential that the application process for both regimes is managed in a coordinated and integrated manner. It is not uncommon that, without proper planning, you might meet the requirements for one regime but be disqualified from the other (for instance, obtaining the DNV without considering the requirements of the Beckham Law can result in the loss of the possibility to apply to those potential tax benefits). By managing both regimes together, we ensure that all documents and requirements are fulfilled coherently and efficiently, avoiding duplications and potential errors. Each case is unique, and our team can provide you with a personalized plan that maximizes your advantages both in terms of residency and taxation.
Therefore, understanding the difference between the Digital Nomad Visa and the Beckham Law is crucial for any international professional looking to relocate to Spain. While the DNV regulates your legal stay in the country, the Beckham Law offers tax benefits that can represent significant savings.
At Lullius Partners, we coordinate both processes with a specialised team, ensuring that you comply with all requirements efficiently, maximising your benefits and minimising risks. If you are considering moving to Spain, contact us for more information and/or comprehensive and personalised advice.
DISCLAIMER: This blog entry aims to clarify the differences between the DNV and the Beckham Law, highlighting the importance of coordinated management to maximize benefits and avoid eligibility conflicts. If you need more information or wish to start your process, we are here to help!
