Compliance for Remote Workers and Digital Nomads in Spain

The risk of a permanent establishment (PE) is the principal tax concern for companies whose employees work remotely from Spain. A PE requires the non-resident company to pay Spanish Corporate Income Tax at 25% on profits attributable to the establishment, plus all associated formal obligations (quarterly returns, annual accounts, etc.).

When is a PE created? Spanish legislation (Article 13 TRLIRNR, RDL 5/2004) and Spain’s double tax treaties (based on Article 5 of the OECD Model) contemplate two main types:

• Fixed place of business PE (Article 5.1 OECD Model): When the company has a fixed place of business in Spain where it carries out all or part of its activity. The remote employee’s home may constitute a fixed place of business if the company uses it on a regular and continuous basis. The post-COVID OECD guidelines (2023) clarify that the mere fact of an employee working from home by their own choice (not at the company’s instruction) should not constitute a PE, but this exception requires clear, documented company policies.
• Dependent agent PE (Article 5.5-5.6 OECD Model / Article 13.1.b LIRNR): When an employee in Spain habitually exercises authority to conclude contracts on behalf of the company, or plays the principal role in negotiating contracts routinely concluded without material modification. This is the most frequent risk for sales directors and executives with signing authority.

Risk factors assessed by Euroaccounts:

• Employee functions: do they negotiate, sign or have authority to close contracts?
• Duration: more than 183 days? OECD guidelines and AEAT practice consider stays exceeding 6 months to significantly increase risk.
• Fixed place: does the company provide or pay for workspace in Spain?
• Activity: is it auxiliary/preparatory (excluded from PE) or a core part of the business?
• Corporate policy: is remote work the employee’s own choice or the company’s instruction?

Consequences of an undetected PE: If the Tax Agency determines an undeclared PE exists, the company faces CIT assessment on attributable profits (25%), late-filing surcharges (1%-15% depending on delay), late-payment interest (currently 4.0625% per annum) and, where applicable, penalties for serious tax infringement (50%-150% of the evaded amount). Euroaccounts has advised over 500 international companies on assessing and mitigating these risks.

Law 28/2022 of 21 December (Startup Law) introduced for the first time in the Spanish legal system a specific regulatory framework for international remote workers, including the digital nomad visa and an international telework residence authorisation.

Digital nomad visa — Requirements:

• Minimum income: EUR 2,520/month (equivalent to 200% of the SMI or, more precisely, 4 times the monthly IPREM, which in 2026 stands at EUR 600/month in 12 payments). Evidenced through contracts, payslips or home-country tax returns.
• Employment or professional relationship: The applicant must evidence an employment or professional relationship with a foreign company existing for at least 3 months before the application.
• Digital means: The work must be performable remotely using exclusively digital means.
• Duration: The visa is granted for up to 1 year. Subsequently, an international telework residence authorisation can be applied for, renewable, with a maximum 5-year duration.
• Limit on services to Spanish companies: Income from services to Spanish companies cannot exceed 20% of total professional activity.

Implications for the employer: Although the digital nomad visa is an individual residence title, the worker’s presence in Spain generates potential obligations for the employer. Notably:

• Employee tax residency: If the worker remains more than 183 days in Spain (Article 9 LIRPF), they become a Spanish tax resident. This may trigger the employer’s obligation to withhold IRPF (not just NRIT) and potentially register as a withholding agent in Spain.
• Social Security: The digital nomad visa does not exempt from Social Security obligations. Without a current A1 certificate or applicable bilateral agreement, the employee must contribute in Spain and the company must register as an employer.
• PE risk: The worker’s continued presence can create PE risk for the company, especially if the employee has commercial or representational functions.

Compatibility with the Beckham Law: Remote workers who obtain the digital nomad visa may elect the Beckham Law regime (Article 93 LIRPF, as amended by Law 28/2022), paying a flat 24% on the first EUR 600,000 of employment income for 6 years, provided they meet the eligibility requirements (not having been Spanish tax resident in the 5 preceding years, among others).

Euroaccounts advises both employer companies and the remote workers themselves, designing structures that enable working from Spain while meeting all obligations and minimising corporate risks. Our trilingual team (Spanish, English and French) in Madrid facilitates communication with all parties involved.