Working Remotely Across Borders: What It Really Means for Your Taxes
Remote work has permanently reshaped how and where people work — but the tax authorities haven't simplified things to match. Whether you're a digital nomad, an expat employee, or a company with remote staff abroad, the fiscal implications can be complex and costly if handled incorrectly.
Tax Residency in a Remote-Work World
The first challenge for any remote worker is establishing where they are actually tax-resident. The standard rule — spending more than 183 days per year in a country — sounds simple, but in practice it creates real ambiguity for people splitting their time internationally or taking extended working trips abroad.
A frequently overlooked but equally important test is the economic centre of interests criterion: if your primary income sources or significant assets are located in Spain, Spanish tax residency may apply regardless of how many days you've physically been present. Beyond that, most double taxation treaties (DTTs) between countries establish their own tie-breaker rules, typically starting with where you maintain a permanent home available to you.
Getting this wrong — or simply not thinking about it — can result in dual tax obligations, unexpected withholding requirements, or penalties down the line. It's worth establishing your position clearly before any cross-border arrangement takes effect.
The Three Core Scenarios: Which Situation Applies to You?
Scenario 1: Working Remotely in Spain for a Foreign Employer
If you are Spanish tax resident
A foreign company does not automatically create a permanent establishment (PE) in Spain simply because one of its employees works from home here. The key conditions are that the employee works from their own home (or a coworking space they pay for themselves), and does not hold authority to sign contracts on behalf of the company.
Where no PE exists, the foreign employer has no obligation to register with the Spanish tax authorities or withhold Spanish income tax from the employee's salary. The employee, however, remains liable to declare their worldwide income in Spain as a tax resident.
If you are not Spanish tax resident
Under most applicable double taxation treaties, salary income paid by a foreign employer to a non-Spanish resident working in Spain is not subject to Spanish taxation. The employment income is taxed exclusively in the country of residence.
Scenario 2: Working Remotely Abroad for a Spanish Employer
If you remain Spanish tax resident
The Spanish company continues to operate as if employment is taking place in Spain: IRPF withholdings apply as normal, and the employee declares the income as part of their annual Spanish tax return. Provided the employer is Spanish, most DTTs prevent the host country from taxing that salary.
If you have become non-resident
The employee must formally notify the Spanish employer of their changed status using Modelo 247 and provide evidence of foreign residency — ideally an official certificate issued by the relevant foreign authority. Work performed outside Spain by a non-resident is not subject to Spanish tax, even when the employer is a Spanish company.
The employer stops withholding on those earnings, but must report them as non-taxable in Spain through Modelo 296. This documentation trail matters: it protects both parties in the event of a tax audit.
Scenarios 3: Working Remotely Abroad for a Foreign Employer
If you remain Spanish tax resident
Spain taxes its residents on worldwide income — but relief is available. Article 7(p) of the IRPF Act provides an exemption for income earned from work performed abroad, subject to specific conditions and an annual cap. Any foreign taxes paid on the non-exempt portion may be credited against your Spanish tax liability to avoid double taxation. The exact mechanism depends on which DTT applies, if any.
If you are not Spanish tax resident
Income earned abroad from a foreign employer falls entirely outside Spain's tax jurisdiction. There is no Spanish filing obligation in respect of those earnings.
That said, it is essential to formally update your address with the Spanish tax authorities (Modelo 030) and obtain a certificate of residence in the new country. These steps are straightforward but critical — they are your primary defence in the event of a later challenge from the Agencia Tributaria.
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Every cross-border situation is different. Let's talk through yours.
The scenarios above provide a general framework, but the correct tax treatment for your specific situation will depend on your country of residence, the applicable treaty, and a range of personal circumstances. Our team advises individuals and companies on international tax and residency matters — contact us here or at info@samirlaw.com
Legal Notice: This article is intended for general informational purposes only and does not constitute legal or tax advice. The applicable rules and treaties vary significantly depending on individual circumstances, the countries involved, and the terms of any relevant double taxation agreement. SamirLaw recommends seeking tailored professional advice before making decisions based on the above.