Bored of working from home? How about working from Spain or Portugal?

Remote work became the new normal with the outbreak of the covid pandemic. But how about work from some of the best picturesque locations in Spain or Portugal? A digital nomad visa will let you do that.

Remote work became the new normal with the outbreak of the covid pandemic. But how about work from some of the best picturesque locations in Spain or Portugal? A digital nomad visa will let you do that.

Over 30 countries offer working professionals, including self-employed, a new residence permit called the ‘digital nomad visa’. Spain and Portugal are the latest to launch this special visa. Under this permit, an individual who can work remotely away from their country of residence can get an entry into a country offering such a visa for a specified duration.

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Over 30 countries offer working professionals, including self-employed, a new residence permit called the ‘digital nomad visa’. Spain and Portugal are the latest to launch this special visa. Under this permit, an individual who can work remotely away from their country of residence can get an entry into a country offering such a visa for a specified duration.

But eligibility criteria for a digital nomad visa are stringent.

The most prominent one is earning a certain income or having a minimum bank balance that varies depending on each country. For example, Portugal mandates that an individual must have a monthly income equivalent to four times the minimum wage in that country. This is equivalent to €3,040 per month (about 2.7 lakh) at current levels. Besides, one must also consider the cost of living in such countries, which would generally be higher for expats than what it would be for locals in that country (see graphic).

In this story, Mint looks at the eligibility requirements and other aspects of applying for a digital nomad visa for Spain and Portugal. Mint spoke to Silvia Manrique de Lara Ojeda, an immigration lawyer based in Spain and Omkar Redkar, a partner at My Golden Pass, a firm that specializes in investment migration, to decode this subject with respect to Spain and Portugal, respectively.

What is the period for which a digital nomad visa is issued?

Spain: A digital nomad visa to Spain can be obtained for one year. However, if an individual is already in Spain on a tourist visa, a three-year visa could be requested from Spain itself. The visa can be renewed each year up to a total of 5 years.

Portugal: One can apply for the digital nomad visa to visit Portugal via two ways – temporary stay visa for less than a year, or residency visa for up to two years.

What are the prerequisites to be eligible for a digital nomad visa?

Spain: One must maintain a bank balance of at least €25,000 (200% of the minimum interprofessional wages in Spain). Alternatively, the same amount can be your annual income demonstrated through work contract and payslips. An additional €9,441 for each family member must be shown when travelling with family.

For Portugal, one needs to note the difference between the D8 visa applicable for digital nomads and the D2 visa, which has been in existence for quite some time. For the latter, the services must be provided by the individual for a client based out of Portugal or any other European country. On the other hand, for the digital nomad visa, the client can be anywhere in the world and the work must be done remotely.

The D2 visa requires the individual to earn at least the minimum national wages in Portugal, which is about 760 euros per month at current rate. The D8 visa, however, requires an individual to earn four times the minimum national wages, which would come to about €3,040 a month.

 

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What are the documents to be submitted to apply for a digital nomad visa?

Spain: An individual must demonstrate proper documentation that he/she has been working for a company or has been an independent professional for at least three months prior to the application. Also, proof that the individual is employed with a company that is in operation for at least one year is required. Besides, a person must also prove that he/she has qualified experience by providing proof of graduation or post-graduation from prestigious universities, professional training, and recognized business schools; or three years of related work experience prior to the application can also be submitted. Health insurance is mandatory. A criminal record certificate is also required.

Portugal: A working professional must submit either a work contract or a declaration by the employer confirming the labour link. In the case of self-employed, a contract copy or a document attesting the services provided to one or more entities is required.

One must also submit the past three month pay-slips as proof of income and a work contract that implies that an individual can work remotely 100%. Valid travel insurance, covering necessary medical expenses is a must. You may also be asked to submit the criminal record. “While those going to Portugal on a residency visa will be covered under the public health system in that country, one still needs to obtain medical insurance as part of application documents,” added Redkar.

Can you work locally in those countries during your stay?

Spain: The terms and conditions to apply for a digital nomad visa for Spain state that income received in Spain or from Spanish companies cannot represent more than 20% of the total income.

Portugal: D8 visa does not envisage that the applicant would take up the local employment. If an applicant finds a job in Portugal due to his/her skill sets and if the employer is willing to sponsor a work visa, it could be applied through the normal process applicable in the EU.

What are the fees to apply for a visa?

For both Spain and Portugal, the cost of applying for a digital nomad visa is roughly €75-80. It’s slightly more when applying for a residence card.

Can the digital nomad visa be renewed?

Spain: Yes, it can be extended for a total of up to 5 years, provided an individual meets all the conditions.

Portugal: Individuals will be allowed to renew their visa, provided they continue to fulfill the requirements of the visa based on which it was granted. For example, after two years, if you wish to renew the Portugal visa, you must earn at least €3,040, in fact, higher because it’s possible that the national wages would go up by then. After five years of residing in Portugal, one can also apply for a permanent residency.

 

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Should you pay tax in these countries?

One must first determine whether he/she becomes a resident in such a country for their period of stay.

According to Atul Puri, managing partner & co-founder, SW India, if an individual becomes a resident of Spain or Portugal or any other country, such individual, in most cases, has to file their tax returns in that country and declare their global income on which taxes need to be paid as per domestic tax laws of such country. However, each country/tax jurisdiction has its own way of determining the residential status of a person.

When it comes to taxability in India, according to Naveen Wadhwa from Taxmann, “if the income accrues or arises or is received in India, irrespective of the residency status, that income may be liable to be taxed in India,” he added.

Not just that, if an individual becomes a non-resident in India because of the period of stay abroad but still earns income from India, the TDS (tax deducted at source) rate applicable for such an individual would be higher. Wadhwa added that “the TDS rate applicable for an NRI depends on the domestic tax law and the treaty India has signed with his/her resident foreign country. The TDS rate will be higher for the NRI as surcharge and cess would be added to the TDS rate.”

Having said that, when an income is taxed in more than one tax jurisdiction, then the country of residence may provide foreign tax credit on such doubly taxed income subject to its domestic tax laws.

Should/can you open a bank account in those countries?

Spain: “To open a bank account, you have to request an NIE, which is an identification number in Spain. This must be purchased from the police in the country,” said Ojeda.

Portugal: If you’re going there as a digital nomad even for less than one year, you need to have the local tax number and a bank account because it is expected that the person would pay taxes in Portugal.

How long does it take for the visa to be processed?

Spain: The option to apply for a digital nomad visa from India is not open yet, two travel agencies that process tourist and business visas for Spain informed Mint. However, you can exercise the second option of applying from Spain. That is, visiting Spain on a tourist visa and submitting the application and required documents.

Portugal: In the South Asia region, we (My Golden Pass) have seen that there is a delay in the visa processing currently, due to a huge demand for such visa, said Redkar. “I recommend that individuals shouldn’t have higher expectations of being able to go to Portugal in six months from starting the process. It might take much longer than that – about a year – given the time it’s taking in processing visas.”

 

(GRAPHIC: MINT)

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What are the financial aspects to keep in mind to stay in such countries?

Since your income will majorly be denominated in rupee, the cost of living in Spain and Portugal will be significantly high. Additionally, there will be a few added expenses for expats in every country. For example, a local national would be able to get a house at a certain rate. But expats will not be able to get the house at the same rate. So, expats would typically end up paying higher. You must budget in the additional amounts that you would incur on staying there as an expat.

Mint’s research shows that your monthly living expenses towards the basics of rent, groceries, local commute and utilities will estimate to around 1.45 lakh and 1.65 lakh in Spain and Portugal, respectively. If you were to live in a tier-2 city, the costs would come down by 20-30%. Since an individual will have a flexibility to stay anywhere in the country, some costs could be saved by staying off-the-city centres.

Take note that these figures do not include expenses on recreational activities such as eating out, sightseeing, shopping and travel, among other things, that you may incur regularly.

Though these costs may seem prohibitively high, it is noteworthy that they fall in line with the minimum income criteria set by the countries. For instance, Portugal demands a minimum monthly income of 2.7 lakh (€3,040). This means living costs in the country are well within the means of anyone who meets the income criterion.

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