Digital Nomads: The visa challenge between Spain and the United States
Introduction
In an increasingly interconnected world, the concept of working from anywhere has ceased to be a utopian idea and has become a reality for many workers.
This freedom of movement translates into a need for adaptation to immigration law at an international level.
Spain, as one of the favorite destinations of the already known as “digital nomads”, introduced the digital nomad visa as part of his Startup Law, approved in 2022, with the aim of attracting international talent and promoting foreign investment in the country.
The initiative reflects an effort to adapt to the new dynamics of remote work, taking advantage of the cultural, climatic and economic advantages that make Spain an attractive place for professionals from all over the world.
However, in practice, the processing of this visa encounters certain obstacles that prevent applicants from meeting the extensive requirements that protect this residence permit.
Although the visa is open to all applicants, regardless of their nationality, the reality is that it is a permit whose viability varies depending on the applicant's origin.
A fairly common case is that of the United States.
It would be reasonable to assume that most workers come from countries with high adoption of remote work and developed digital economies, such as the United States.
However Why does this visa between the two states not seem to work?
What legal, fiscal and administrative barriers hinder this process?
In this article we analyze the Main limitations and challenges faced by US citizens who wish to take advantage of the new Spanish digital nomad visa, as well as the difficulties presented by the system.
Understanding this complexity is key for those who wish to cross the pond and enjoy the advantages of immigration law.
Problems with specific documentation
First of all, it should be noted that each visa application requires general documentation and specific documentation.
It is in the latter where the drawbacks lie.
It is essential to know the basis of the visa that resides in its recipients: “Foreigners who want to carry out a work or professional activity remotely for companies located outside Spain through the exclusive use of computer, telematic or telecommunication means.”
Therefore, being a visa that requires a job for a foreign entity It involves two aspects to take into account for a resident in Spanish territory: Social Security and Tax Residence.
Why is this a problem for Americans?
Regarding the first aspect, Social Security, it represents a real challenge for those applicants who are self-employed.
Despite being a visa open to self-employed workers. This is because a company located outside of Spain, does not have to be affiliated with the National Social Security System.
This is an anticipated complication, which was intended to be resolved in two possible ways.
On the one hand, by registering the contracting company with the Spanish Social Security.
However, this is a procedure that can involve an exhaustive administrative process (from registering with the General Treasury of Social Security (TGSS) as an employer in Spain, obtain a Contribution Account Code (CCC), until the expatriate worker is registered).
This process, which may require both bureaucratic and financial effort, is often avoided by companies.
Or in alternative cases, it is not even considered, since within the teleworking policies the processing of visas is contemplated as a personal management of each worker who chooses the international teleworking option.
That is, indirectly A differentiation is made based on mobility, when the company decides (expatriate worker) or when it is the will of the worker himself.
Therefore, whether the company joins the Spanish system or the worker has to manage his/her own registration, a problem arises: double quotation Social Security. Both in the country of origin and in the country of destination.
Bilateral agreements as a solution?
Faced with this obstacle, a solution is once again predicted: Bilateral Agreements on Social Security. The United States recognizes them as “Totalization Agreements.”
These have a Double objective: avoiding double taxation (a situation that occurs when a worker from one country works in another and must pay Social Security taxes for both systems) and Filling gaps in benefits coverage for workers whose careers span two different states.
Since 1986, the United States and Spain have maintained a Bilateral Agreement which ensures these purposes.
In its article 5, the Convention establishes that any worker in the service of a company in one of the contracting states "The legislation of the first contracting state will apply to him, as if he were working in its territory."
This means that said worker would be exempt from paying social security contributions in Spain.
This “tax validation” is accredited by the “Certificates of Coverage”, recognized in Article 3 of the Administrative Agreement of this Convention.
Such certificates They must be issued by the relevant Social Security Institution of each State.
The problem seems to be solved: if there is a Social Security Agreement, this requirement will be covered.
What is the drawback?
At present, The US Social Security Institution (SSA) is blocking the issuance of Certificates of Coverage for international teleworkers.
Which, therefore, prevents the issuance of the visa.
The explanation is that the United States does not recognize the situation of teleworkers within the Bilateral Agreement.
That is, the US side interprets the Agreement as only applicable to expatriate workers, those who are intentionally and temporarily transferred to Spain to perform a specific intra-company task.
Therefore, nomadic teleworkers Those who decide to exercise their right to choose a place of residence are not covered by social security protection.
The latter being a requirement essential for the issuance of the digital nomad visa, is an option that is difficult to access for workers with these characteristics.
Signing of new Social Security Agreement
For this reason, both States signed a new Social Security Agreement between Spain and the United States in April 2024, which, in addition to replacing the original one, aims to facilitate professional mobility between the countries.
However, The authorities have not ratified the new version, so the initial Agreement is still in force.
Tax residence
On the other hand, the second aspect is related to Tax Residence. This is a more long-term consequence.
According to Spanish legislation, a tax resident is considered to be any person who remains in Spanish territory for more than 183 days in a calendar year or who has the centre of his or her economic interests or main activity in Spain, regardless of the number of days of residence.
Rather than being an inconvenience, it is an additional management task to take into account.
Well, any international teleworker who decides to reside in Spain for more than 183 months must pay taxes on their worldwide income.
So you should check that there is a Bilateral agreement to avoid double taxation.
It is worth mentioning that the visa offers an advantage to its applicants, since instead of managing taxation through the standard income tax (IRPF), is subject to the Non-Resident Income Tax (IRNR), which implies a lower percentage than the registered workers in Spain
Parallel visas as an alternative
Faced with bureaucratic complications, some specialists choose to process parallel visas. Such as the permit for non-profit residency.
However, case law warns that it is not apropiate opt for this alternative for those who wish to work remotely from Spain.
As, This type of visa prohibits carrying out any paid work or professional activity. Proof of this is the ruling of the High Court of Justice of the Community of Madrid, Administrative Litigation Chamber No. 868/2022 of November 04, 2022.
Conclusion
In conclusion, the digital nomad visa between the United States and Spain represents an important step towards labor globalization, but it also highlights the pending challenges in its implementation.
The lack of a clear framework for Social Security remains one of the biggest drawbacks, creating uncertainty for workers and administrative barriers for companies.
Nevertheless, this type of visa offers promising prospects for strengthening economic and cultural relations between the two countries, provided that regulations are adapted to the real needs of digital nomads.
Among some of the solutions proposed, in addition to adapting the Agreement, the implementation of a more flexible contribution system in Spain, adapted to the characteristics of remote workers, stands out.
Which could reduce costs and administrative burden, making it more accessible to this group.
Adapting bilateral agreements and harmonizing tax and contribution systems is essential so that this initiative fulfils its objective of attracting international talent and promoting the global mobility of professionals.
The future of the digital nomad visa will depend on the ability of both countries to overcome these barriers and consolidate a model that is not only attractive, but also efficient and sustainable.
RRYP Globalimmigration lawyers.
