Remote working from Spain for a foreign company

Tax residency is not decided by your contract or your nationality: it is decided by where you are. You are a resident if you stay more than 183 days of the calendar year in Spanish territory, counting sporadic absences, or if the main core or base of your activities or economic interests is located in Spain. Furthermore, if your legally non-separated spouse and your underage children live here, Hacienda (the Spanish tax agency) presumes that you also reside here, unless proven otherwise.

Spain does not split the tax year. If you cross the threshold, you are a resident for the 12 months, including those you lived abroad. And a resident pays taxes on their worldwide income, including the salary paid by a company that has neither an office nor a NIF (tax identification number) in Spain.

The double taxation agreement does not change that result. In the agreements followed by Spain, the salary from work physically performed in Spanish territory is taxed in Spain, even if the payer is abroad. Usually, the company's country stops withholding taxes as soon as you hand them your Spanish tax residency certificate: if they have already withheld taxes, the refund is requested there, not here. Managora obtains that certificate for you and prepares the communication for your employer.

Yes, and it is the cleanest route. A company with no headquarters or branch here can register with the Spanish Seguridad Social as an employer without an establishment, obtain its contribution account code and register you in the general regime. There is no need to set up a company or register a branch in the Commercial Registry. What is required is that the company first obtains a non-resident NIF from the tax agency and, if the registration is processed by a representative in Spain, grants a power of attorney: this power of attorney usually requires a notario (notary) from the company's country or a consular notary office and, in many cases, an apostille and a sworn translation. Managora tells you exactly what power of attorney is needed and prepares it for you.

There remains the part that generates the most resistance in the company: paying contributions every month from abroad. The European social security regulation (article 21.2 of Regulation 987/2009, since 21.1 imposes the general obligation on the employer) allows a written agreement by which you assume compliance with that obligation, with the company and worker contributions, and the company pays them to you together with your payroll. The company remains responsible if you do not pay, but it no longer has to operate with the treasury month by month. This is the argument that usually unlocks a no from human resources.

The other 2 routes are an employer of record, which hires you here and invoices your company, and invoicing yourself as an autónomo (freelancer). The third seems the cheapest and is the one that causes the most problems: if you work exclusively for a single payer, with their schedule, their means and their instructions, the Labour Inspectorate can classify you as a false autónomo and claim the contributions for the entire period with a surcharge, in addition to the penalty. You can see the updated amount in the Registering as an autónomo file if that is your route.

The European rule is that you pay social security where you work. If you type from your home in Valencia, your work is performed in Spain and the competent Seguridad Social is the Spanish one, even if your boss, your payroll and your clients are abroad.

There are 2 exceptions worth knowing. The first appears when, in addition to working remotely from Spain, you regularly go to the company's headquarters: then you work in 2 States and the applicable law is decided by percentages. The general criterion is that performing a substantial part of the activity in Spain, which is your country of residence (indicatively, 25% of the working time or remuneration), attracts all the social security contributions to Spain.

The second is the European Framework Agreement on habitual cross-border telework, applicable since 1 July 2023: it allows you to request to continue paying social security in the company's country when teleworking from your country of residence remains below 50% of the working time. It only works if both States have signed it, it is not applied automatically (it must be requested) and it is documented with an A1 certificate for a maximum of 3 renewable years. Checking if your country is among the signatories is the first step, because your entire contribution bill depends on it.

Outside the European Union, the European Economic Area and Switzerland, the bilateral social security agreement that Spain has signed with that country, if it exists, rules. Without an agreement, paying social security in Spain is the only way out. And when the applicable legislation is Spanish and you travel to the company's headquarters, the paper that prevents them from claiming contributions there depends on the destination: the A1 certificate is only issued within the European regulations (European Union, European Economic Area and Switzerland, and the United Kingdom due to the Withdrawal Agreement), while for a country with a bilateral agreement or with the Multilateral Ibero-American Agreement, the specific form of that agreement is issued. We process it in the A1 Certificate for posted workers file.

Yes, if you have just arrived. The special regime for posted workers, known as the Beckham law, allows you to pay taxes at 24% on the first €600,000 of employment income and at 47% on the excess, instead of applying the general progressive scale. It lasts for the year of the relocation and the following 5 years.

Since the 2022 startups law, the remote worker is expressly included: someone who moves their residence to Spain and, without being ordered by the employer, provides their work remotely through the exclusive use of computer, telematics and telecommunication means. Hacienda will ask you for a document from the employer that recognises the employment relationship, the start date of the activity shown on the registration with the Spanish Seguridad Social (or on the documentation that allows you to maintain the social security of origin) and the estimated duration of the work in Spain.

The 2 requirements that knock down the most applications are not having been a tax resident in Spain in the previous 5 tax periods and not obtaining income through a permanent establishment in Spain. And a warning about the 24%: it is the common territory rate. The Basque Country and Navarre have their own income tax and their own rules for posted workers, so that figure is not valid if you pay taxes in a foral territory.

The regime does not apply by itself: it is opted for with form 149 within the 6 months following the start date of the activity shown on the registration with the Seguridad Social in Spain and, from then on, it is declared every year with form 151 instead of the ordinary declaration. In exchange, you lose personal and family allowances and regional deductions, so on moderate salaries you may end up losing money. We compare the 2 tax liabilities before submitting anything: you can see the updated amount in the Beckham Law file.

A foreign company without a permanent establishment in Spain is not obliged to withhold IRPF (personal income tax) on your behalf. You receive the gross amount and settle the entire tax in the annual declaration of the following year. It is the most expensive cash flow problem of this situation: it is advisable to set aside every month the part that will later have to be paid all at once.

Receiving income without withholding does not exempt you from declaring, quite the opposite. The threshold that obliges you to submit the declaration is much lower when the payer is not obliged to withhold, so in practice almost any salary obliges you to file the income tax return.

If you maintain accounts, securities, real estate or cryptocurrencies outside Spain, there are 2 annual informative declarations (forms 720 and 721) that are submitted when their thresholds are exceeded. Those covered by the impatriate regime do not submit form 720 during the years in which the regime applies, because they are taxed under the rules for non-residents: only on their Spanish income, with the exception of the salary, which is taxed in full.

This is the risk that truly worries the company's tax department and the reason why many say no to remote work from Spain. If from your home you negotiate and conclude contracts that bind the company, or if the company formally imposes your home as an office and assumes its expenses, the tax agency may consider that this company has a permanent establishment in Spain, with the obligation to declare the profit attributed to it here.

A purely technical position, without the capacity to bind the company and with a laptop as the only means, is in the reasonably safe zone. But the Directorate General for Taxes resolves case by case and looks at the material and human resources that the company actually controls in Spain, not the job title.

The detail that almost no one looks at: the OECD multilateral convention (MLI) has modified the dependent agent clause of a good part of the agreements signed by Spain and has expanded the cases in which a permanent establishment is considered. Before accepting an answer as valid, you have to read the agreement of your company's country in its already modified version, which is what we do when opening the file.

Then immigration comes first. Ley 14/2013 (the Spanish Entrepreneurs Act), with the chapter added by the startups law, created the visa and the residence authorisation for international telework, the digital nomad route: working remotely for companies located outside Spain, as an employee only for foreign employers, or as a freelancer provided that the work for companies located in Spain does not exceed 20% of the total of your professional activity.

If you are already in Spain in a regular situation, the 3 year residence authorisation is requested before the Large Companies and Strategic Collectives Unit (UGE-CE), which resolves in 20 days and where administrative silence is positive. If you are abroad, what is requested is the telework visa for up to 1 year at the Spanish consulate in your country. Among the requirements, you must prove financial means equivalent to 200% of the current minimum interprofessional wage, with increases for each family member accompanying you.

This authorisation is also the natural door to the impatriate regime, so the order and dates matter: the 6 month deadline for form 149 starts running with the start date of the activity shown on the registration with the Seguridad Social and does not wait for you to finish the rest of the procedures. You can see the updated amount in the Digital Nomad Visa and Residence file.

Managora prepares and submits it for you from start to finish: the registration of your company with the Seguridad Social as an employer without an establishment, your registration, the agreement so that the contributions are paid without friction, the A1 certificate when applicable, the international telework authorisation, form 149 within the deadline and your annual declaration.