What about UK tax?
Employment income – this will depend on your tax residence status under the UK Statutory Residence Test. If this test (or the treaty ‘tie breaker rules’) deem you to be non-UK resident, only UK source income will be taxed there. Your work conducted remotely from Spain would just be taxed in Spain as described above), even if paid from the UK. Unless you carry out substantial work in the UK, your employer can apply for a NT (no tax code) to pay you on a gross basis.
Capital gains – if you are living in Spain under the Digital Nomad Visa, gains made on the sale of shares – including shares in your UK company – could be free of capital gains tax in both countries. This is provided you remain non-UK resident for five UK tax years.
Dividends – if the disregarded income treatment applies (you give up the UK personal allowance) the UK tax liability is highly reduced or might even be nil. And dividends received from UK companies are not taxable in Spain.
Who will this appeal to?
This new visa obviously appeals to digital nomads who fancy living in Spain for a few years.
But it is particularly attractive to UK professionals and businesspeople who plan to retire in the next few years. If you are on a high UK salary and your company allows you to work remotely, you may be able to move to Spain under the Digital Nomad Visa and pay less income tax under the Beckham regime.
If as part of your retirement plans you will be selling shares in your UK company, if you dispose of them while living and working in Spain under this visa, you escape capital gains tax in both countries. This could be a considerable saving.
If this applies to you, seek advice from a cross-border wealth management firm who understands the intricacies of both Spanish and UK taxation and the interaction between them, and who can help you plan and time your relocation and when you sell UK assets to take full advantage of the tax saving opportunity.
All the facts and data above has been provided to us by our wealth management partner based here in Marbella, Blevin Franks. For more information on this or other tax and finance matters we are happy to connect you.