The ‘digital nomad’ was an unknown concept until a few years ago. Today it is an increasingly common professional profile. But what about paying taxes for this growing group of professionals?
With the digitization of the economy, new business models require little or no physical presence in the country where consumers are located and more and more professionals are opting to practice their profession remotely, for example while traveling the world. A lifestyle that is summarized with the term digital nomad.
In Spain, the Canary Islands have become a popular destination for these temporary residents, probably after the publication in the New York Times of the article ‘Co-Working on Vacation: A Desk in Paradise’ in 2015 and the events Nomad City Gran Canaria and the Tenerife Work & Play organized on the island archipelago for ‘digital nomads’.
Hard question: where do ‘digital nomads’ have to pay their taxes?
With travel as a lifestyle and the world as an office, it is not surprising that blogs and websites that specialize in ‘digital nomads’ publish articles about paying taxes. The question where these professionals have to pay their taxes is not a simple question to answer.
Most countries tax the income earned on their territory in the case of resident taxpayers from another country, while most countries also tax the income earned by their tax residents abroad. Only the existence of an agreement between two states to prevent double taxation prevents the same income from being taxed twice.
Are you liable for tax in several countries?
On the other hand, since each country determines the criteria that determine if there is a situation of fiscal residency, a person may at the same time be considered a taxable person in more than one state. It can even be complicated to lose this status in the country of origin.
In what case does Spain consider you as a fiscal resident?
In Spain, for example, a natural person is considered a tax resident if he or she stays in Spanish territory for more than 183 days during the calendar year, temporary absence being considered as a period of permanent residence, unless the person in question can prove that he or she is a tax resident in another country. But also in case the most important core or basis of his/her economic activities or interests lies in Spain, both directly and indirectly. Similarly, unless proven otherwise, it is assumed that a person is a tax resident in Spain when his/her spouse/husband and minor children are.
Ownership of real estate, businesses, holdings in Spanish companies and, in general, any source of assets, may be considered by the Spanish authorities as the basis of economic activities and interests and may even prevent the owner from losing his status as a tax resident may, even though he/she no longer lives in Spain on a (semi) fixed basis.
In this case too, only the agreements between countries to prevent double taxation can ensure that individuals do not pay double taxes.
In short, digital nomads have to deal with a complex network of internal regulations and bilateral agreements that they need to know to meet their tax obligations, despite the fact that some, led by the book by W.G. Hill PT The Perpetual Traveler believe that this legal chaos offers them the opportunity to minimize their tax assessment.
Do you want more information about this post or about taxes in Spain? Read below what you can download for free or ask us your question without obligation.
Brochure Tax Rates Spain 2019
Download free and without any obligation our brochure Tax Rates 2019, with the current tax rates for companies, individuals and real estate. A ‘must have’ for advisers who have clients with business, family or a holiday home in Spain.
Best deal > Free alert service
We offer our clients, advisors and visitors of this website the possibility a free alert service. No costs and no obligations. We will inform about deadlines for tax returns and interesting changes and possibilities for (specificly) foreigners who are living in Spain, have business in Spain or who have family or a house in Spain.
Do you want to stay up to date? Then fill in your name and email in the Free alert service fields on our home page. Subscribe now, it’s free.
questions about starting a business in Spain?
We, EuroEconomics, the company behind EasyTaxSpain, have a team of more than 50 tax advisors, lawyers and accountants. Do you want to start a business in Spain?
Do you have questions about taxes or starting a business in Spain and are you looking for a contact that looks after tax affairs and tax returns in Spain?