Compliance for Digital Nomads and Remote Workers: Foreign Companies in Spain (2026)

Spain has become one of the most sought-after European destinations for international remote work, and the combination of Ley 28/2022 (the Spanish Startups Act, including the digital nomad visa) with the impatriate regime under Article 93 LIRPF (Régimen Beckham, the Beckham regime) has created a fiscally attractive environment. It has also multiplied the risks for foreign companies with employees working remotely from Spain: if the relationship is not properly structured, the employing company can end up with an undeclared permanent establishment, outstanding IRNR (non-resident income tax) withholding obligations, and claims from the Tesorería General de la Seguridad Social (TGSS, Spanish Social Security).

This guide is addressed to HR directors, CFOs and compliance officers of foreign companies that have, or are considering having, personnel working remotely from Spain. It covers both perspectives (the worker’s and the employer’s), the four possible structures (direct hiring, EOR, Spanish subsidiary, freelance), and the AEAT (Spanish tax authority) focus areas in 2026.

The Four Possible Structures for Remote Work from Spain

1. Direct Hiring by the Foreign Parent

The employee is hired and paid by the foreign parent under a home-country employment contract and works remotely from Spain. This is the cheapest option to operate and the riskiest fiscally.

Advantages: zero implementation cost; the contract and payroll remain under the home jurisdiction.

Risks:

• Permanent establishment (PE) in Spain if the employee has authority to bind the company, manages a team, or performs functions that exceed the “auxiliary or preparatory” threshold under Article 5 of the OECD Model.
• IRNR / IRPF withholding obligations on the employee: depending on the regime (tax resident, Beckham, DNV), the foreign parent may be required to withhold.
• Social security: if the employee does not hold a valid A1 certificate or the A1 expires, mandatory enrolment in the RGSS may arise, triggering retroactive employer and employee contributions.
• Collective bargaining and labour-law qualification: even if the contract is governed by foreign law, Spanish case law may apply Spanish labour law where the work is habitually performed in Spain.

This structure is appropriate where the employee is clearly temporary (less than 6 months), an individual contributor without authority (not a manager, not a sales rep with closing authority), and holds a valid A1 certificate.

2. Employer of Record (EOR)

A Spanish company (Velocity Global, Deel, Remote.com, Papaya, ManpowerGroup, etc.) acts as the formal employer of the worker in Spain, hires the employee under Spanish labour law, runs payroll, withholds IRPF, contributes to Social Security, and invoices the total cost back to the foreign parent.

Advantages: rapid implementation (days), local labour-law compliance, no need to incorporate a subsidiary.

Risks:

• Monthly EOR fee (typically EUR 500-1,200 per employee per month, on top of salary and employer costs).
• PE risk is mitigated, not eliminated: if the employee has authority to bind the parent or carries out core activity, AEAT may still find a PE despite the EOR. The AEAT has issued binding rulings (e.g. V0066-22) clarifying that an EOR is not an “automatic shield”.
• Turnover: switching an employee between EOR and own headcount can be cumbersome.

EOR is the most widely used option for individual hires (1-5), medium-term assignments (12-36 months), or as a bridging phase while a subsidiary is being set up.

3. Spanish Subsidiary or Branch with Direct Payroll

The foreign company incorporates a Spanish subsidiary (typically an SL) or branch, and the employees are placed on the Spanish entity’s payroll. The Spanish entity invoices the parent for intra-group services under a transfer pricing policy.

Advantages: clean fiscal structure, scalable to multiple employees, natural fit with Spanish tax incentives and deductions (R&D, etc.).

Risks:

• Set-up and ongoing cost (EUR 5,000-12,000 initial plus EUR 8,000-25,000 per year for management, accounting and compliance).
• Implementation timeline of 4-12 weeks (incorporation + bank account opening + Social Security registration).
• Mandatory transfer pricing policy if statutory thresholds are exceeded.

This is the correct option when there are 5+ employees or when the activity is strategic rather than auxiliary.

4. Freelance / Autónomo Engagement

The worker registers as autónomo (self-employed) in Spain and invoices their services to the foreign company. The company pays the invoice without withholding (where the worker is a Spanish tax resident, the autónomo settles their own IRPF directly).

Advantages: maximum flexibility, zero cost for the company.

Risks:

• False self-employment / disguised employment: if the relationship displays features of subordination (working hours, place of work, detailed instructions, exclusivity, economic dependence), the Spanish Labour Inspectorate may reclassify it as employment with retroactive effect, and the company will become liable for Social Security registration, IRPF withholding and potential penalties.
• TRADE (trabajador autónomo económicamente dependiente, the economically dependent self-employed worker, Article 11 LETA): where more than 75% of an autónomo’s income comes from a single client, the regime applies a specific framework that approaches employment status in certain rights.

This structure works only where the relationship is genuinely independent (organisational autonomy, deliverables-based work, multiple clients) and is neither stable nor exclusive.

Permanent Establishment Risk: the Most Underestimated

Article 5 of the OECD Model defines a permanent establishment as a “fixed place of business through which the business of an enterprise is wholly or partly carried on“. The 2017 Model (revised in 2025) reinforced the anti-fragmentation rule and the dependent-agent PE concept.

For an employee’s remote work from Spain not to constitute a PE of the foreign employer, the following conditions must be met simultaneously:

• The employee does not habitually have authority to conclude contracts in the company’s name.
• The employee’s activity in Spain is of an auxiliary or preparatory nature (not core to the principal business).
• The employee does not have a dedicated office or company premises placed at their exclusive disposal in Spain.
• They are not a manager with a team in Spain reporting to them.

If any of these elements fails, PE risk arises. Binding rulings from the Dirección General de Tributos (DGT, the tax rulings directorate) issued between 2023 and 2026 have clarified that:

• A regional sales rep with authority to close contracts with clients in Spain and the rest of Europe does create a PE.
• A Country Manager for Spain, even working from home, does create a PE (fixed place of business plus authority).
• A software developer contributing to a product without client contact, without authority, and without team management generally does not create a PE.
• An EMEA VP of Sales based in Spain with a team across several countries reporting to them may create a PE even if most of the work is remote.

The test is functional, not based on physical location. The test applied by AEAT is not “do they have an office?” but “what does this employee do, and what do they represent for the employing company?”.

If AEAT regularises a hidden PE: the profits attributable to the PE are imputed, with penalties of 50%-150%, late-payment interest, and potential criminal referral where the evaded tax exceeds EUR 120,000 per fiscal year.

Tax Regime for the Worker: Three Routes

Route A — Ordinary Tax Resident

If the employee spends more than 183 days in Spain in the calendar year (Article 9 LIRPF), or has their centre of economic interests in Spain, they are a tax resident and pay general IRPF (Spanish personal income tax) on worldwide income.

2026 marginal rates: 19% up to EUR 12,450; 24% up to EUR 20,200; 30% up to EUR 35,200; 37% up to EUR 60,000; 45% up to EUR 300,000; 47% on the excess (with slight variations by Autonomous Community in the regional bracket).

Route B — Impatriate Regime (Beckham regime, Article 93 LIRPF)

Employees relocating to Spain to work for a Spanish company (including a Spanish subsidiary) who meet the requirements of Article 93 LIRPF are taxed at 24% on the first EUR 600,000 of employment income and 47% on the excess, for 6 years (year of arrival plus the following 5).

Key requirements in 2026:

• No prior Spanish tax residence in the previous 5 years (Ley 28/2022 reduced this from 10 to 5).
• Relocation to Spain triggered by an employment contract with a Spanish company (including a subsidiary), or as a company director, or as a worker posted under a secondment order from the employer, or to carry out an economic activity classified as “entrepreneurial”.
• No income that would qualify as obtained through a permanent establishment in Spain.

Route C — Digital Nomad Visa (DNV)

For non-EEA nationals working remotely from Spain for a foreign employer. It grants access to the Beckham regime with the 24%/47% rates and 600k cap, for 6 years.

Visa requirements:

• Minimum 1 year of continuous activity with the company or as a freelance professional before applying.
• Existing contract with a foreign employer with at least 3 months’ tenure at the time of application.
• The activity must be capable of being performed remotely.
• Minimum income: 200% of the monthly SMI (the Spanish minimum wage), approximately EUR 2,762 per month in 2026 (with SMI at EUR 1,381) for the applicant. Additional family members: 75% of the SMI for the first dependant and 25% for each additional one.
• No criminal record, valid health insurance, accommodation.
• The foreign employer must be operational with at least 1 year of activity.

The DNV grants an initial stay of 1 year, renewable. The Beckham regime is applied for separately before AEAT.

Social Security: the A1 Certificate and Regulation 883/2004

For European employees working remotely from Spain temporarily while keeping their employment contract in another EEA / Swiss country, Regulation (EC) 883/2004 on the coordination of social security systems applies.

The A1 certificate evidences that the worker remains affiliated with the home-country social security system, exempting them from registration in Spain. Typical scenarios:

• Temporary posting (Article 12 of Regulation 883/2004): up to 24 months, exceptionally extendable.
• Multi-state activity (Article 13): where the worker carries out a substantial portion of activity (>25%) in several Member States, the social security of the country of residence applies, or that of the country where the employer’s main registered office is located, depending on the specific criteria.
• EU Framework Agreement on cross-border telework (in force since July 2023): allows up to 49% of working time from the country of residence without changing the applicable social security, under a bilateral agreement signed by Spain.

Without a valid A1 certificate, AEAT and TGSS may require enrolment in the Spanish RGSS with retroactive contributions (employer share: approximately 30% of salary; employee share: approximately 6.4%).

For employees from outside the EEA / Switzerland / United Kingdom, the answer depends on the bilateral social security agreement between Spain and the home country (agreements exist with the United States, Brazil, Argentina, Mexico, Morocco, Chile, Colombia, the Philippines, Japan, Korea, Canada, etc.). Without an agreement, enrolment in Spanish Social Security is mandatory.

Country-Specific Cases

United States

• US employee working remotely from Spain: DNV + Beckham eligible (24% taxation / 600k cap). If the 183-day threshold is exceeded, they become a tax resident with Beckham still available.
• US-Spain bilateral social security agreement: a certificate of coverage allows continued enrolment in US Social Security for up to 5 years.
• PE risk for the US employer: high if the employee holds any authority. EOR or subsidiary recommended.

United Kingdom

• Post-Brexit, UK citizens are treated as third-country nationals: they require a DNV or another residence-and-work authorisation.
• UK-Spain bilateral social security agreement signed after Brexit: an A1-equivalent certificate is in force.
• Beckham regime available.

LatAm Countries (Mexico, Argentina, Colombia, Chile)

• DNV applicable (these are not EEA states), unless the individual also holds Spanish nationality.
• Robust bilateral social security agreements with most of these countries: certificates of coverage apply.
• A high proportion of LatAm remote workers end up taxed under ordinary IRPF (not Beckham) because of prior residence in Spain exceeding 6 months.

France / Germany / Italy

• EEA: freedom of movement, no visa required.
• Regulation 883/2004: A1 certificate available directly. The cross-border telework Framework Agreement allows up to 49% of working time from the country of residence without changing the applicable social security.
• Beckham regime available where there is a genuine relocation under a Spanish contract.

Decisions to Make Before Operating

1. Functionally map the employee’s activity in Spain: what exactly do they do, with what authority, over which clients/teams? This determines PE risk.
2. Confirm the applicable tax regime (resident, Beckham, DNV) and make a deliberate decision with proper advice.
3. Secure social security coverage from day one: A1, bilateral certificate, or RGSS enrolment.
4. Choose the structure (direct, EOR, subsidiary, freelance) based on number of employees, expected duration, and how strategic the activity is.
5. Document the relationship: tailored contract, equipment and tools policy, criteria of independence if freelance, telework annex where applicable.
6. Transfer pricing policy where there is a subsidiary or intra-group EOR services: range of comparables, reasonable cost-plus margin, formal contracts.