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

More than 30 countries offer a new residence permit called the ‘Digital Nomad Visa’ to working professionals, including the self-employed. Spain and Portugal are the latest countries to launch this special visa. Under this permit, a person who can work away from his country of residence can gain entry into the country offering such visa for a specified period.

But the eligibility criteria for Digital Nomad Visa are stringent.

The most prominent is earning a certain income or having a minimum bank balance which varies depending on each country. For example, Portugal mandates that a person’s monthly income must equal four times the minimum wage in that country. This is equivalent to €3,040 per month (approx. 2.7 lakh) at current levels. Furthermore, one must also consider the cost of living in such countries, which will generally be higher for expats than 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 topic with respect to Spain and Portugal respectively. Is.

For what period is the Digital Nomad Visa issued?

Spain: A Digital Nomad Visa for Spain can be obtained for one year. However, if a person is already in Spain on a tourist visa, a three-year visa can be requested from Spain itself. The visa can be renewed every year for a total of 5 years.

Portugal: One can apply for a Digital Nomad Visa to visit Portugal in two ways – a temporary stay visa for less than one year, or a residency visa for up to two years.

What are the prerequisites to be eligible for Digital Nomad Visa?

Spain: The individual must maintain a bank balance of at least €25,000 (200% of the minimum inter-occupational wage in Spain). Alternatively, the same amount can be your annual income as shown through work contract and pay slip. An additional €9,441 must be shown for each family member when traveling with a family.

For Portugal, it is important to note the difference between the D8 visa applicable to digital nomads and the D2 visa that has existed for some time. For the latter, the services must be provided by the person for a client located outside Portugal or another European country. On the other hand, for Digital Nomad Visa, the client can be anywhere in the world and the work has to be done remotely.

The D2 visa requires the person to be earning at least the minimum national wage in Portugal, which is around 760 Euros per month at the current rate. However, the D8 visa requires a person to earn four times the national minimum wage, which would be around €3,040 a month.

What are the documents to be submitted to apply for Digital Nomad Visa?

Spain: An individual must show proper documentation that he/she has been working for a company or has been an independent professional for at least three months prior to applying. Also, proof that the individual is employed with a company in operation for at least one year. In addition, a person must also prove that he/she has qualifying experience by providing proof of graduation or post-graduation from prestigious universities, professional training, and accredited business schools; OR Related work experience of three years prior to application may 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 verifying the labor link. In the case of self-employment, a contract copy or document certifying the services provided to one or more entities is required.

One also needs to submit last three months salary slips and a work contract as proof of income, which means one can work 100% remotely. Valid travel insurance, covering necessary medical expenses, is a must. You may also be asked to submit a criminal record. “Those going to Portugal on a residency visa will be covered under the public health system in that country, yet need to obtain medical insurance as part of the application documents,” Redker said.

Can you work locally in those countries during your stay?

Spain: The terms and conditions for applying for a Digital Nomad Visa for Spain state that income derived in Spain or from Spanish companies cannot represent more than 20% of total income.

Portugal: The D8 visa does not envisage that the applicant will take up local employment. If an applicant finds a job in Portugal because of his/her skills and if the employer is willing to sponsor a work visa, it can be applied for through the normal procedure applicable in the European Union.

What is the fee for applying for a visa?

For both Spain and Portugal, the cost of applying for a Digital Nomad Visa is around €75-80. It is slightly higher when applying for a residence card.

Can the Digital Nomad Visa be renewed?

Spain: Yes, it can be extended for a total of 5 years, provided a person fulfills all the conditions.

Portugal: Individuals will be permitted to renew their visas provided they continue to meet the requirements for the visa on the basis of which it was granted. For example, after two years, if you want to renew your Portugal visa, you will need to earn at least €3,040, in fact, more as it is likely that national wages will have increased by then. One can still apply for permanent residence after living in Portugal for five years.

Should You Pay Taxes in These Countries?

One must first determine whether he has become resident in such country for the duration of his stay.

According to Atul Puri, managing partner and co-founder, SW India, if a person becomes a resident of Spain or Portugal or any other country, such a person has to file his tax return in that country in most cases and file his global income tax return. Announcement has to be made. Income on which taxes are required to be paid in accordance with the domestic tax laws of such country. However, each country/tax jurisdiction has its own way of determining the residential status of an individual.

When it comes to taxability in India, according to Taxmann’s Naveen Wadhwa, “If income accrues or arises or is received in India, then that income may be taxed in India, irrespective of the residence status.” is,” he said.

Not only this, if a person becomes non-resident in India due to the period of his stay abroad but still earns income from India, the TDS (Tax Deducted at Source) rate applicable to such person will be higher. Wadhwa said that “the TDS rate applicable for NRIs depends on the domestic tax law and the treaty India has signed with the foreign country of its resident. The TDS rate for NRIs will be higher as surcharge and cess will be added to the TDS rate.” “

Having said that, when an income is taxed in more than one taxing jurisdiction, the country of residence may grant foreign tax credit on such double taxed income under its domestic tax laws.

Can you open a bank account in those countries?

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

Portugal: If you are moving there as a digital nomad for less than a year, you must have a local tax number and a bank account as that person is expected to pay taxes in Portugal .

How long does it take for Visa to be processed?

Spain: The option of applying for a digital nomad visa from India is not open for now, two travel agencies processing tourist and business visas for Spain have informed Mint. However, you can use another option to apply from Spain. Means going to Spain on tourist visa and submitting the application and necessary documents.

Portugal: In the South Asia region, we (My Golden Pass) have seen that there is currently a delay in visa processing due to the huge demand for such visas, Redkar said. “I recommend that individuals should not have high expectations of being able to visit Portugal in six months from starting the process. It may take longer than this – around a year – given the time it takes to process visas.”

What financial aspects should be kept in mind for living in such countries?

Since your income will be predominantly in rupees, the cost of living in Spain and Portugal will be quite high. Additionally, there will be some additional costs for expats in every country. For example, a local citizen will be able to get a house at a fixed rate. But expats will not be able to get houses at the same rate. Therefore, expats will usually end up paying more. Staying there as an expat will cost you an extra amount.

Mint research suggests that your monthly living expenses towards the basics of rent, groceries, local transport and utilities would be approx 1.45 Lakh and 1.65 lakh in Spain and Portugal respectively. If you live in a tier-2 city, the cost will come down by 20-30%. Since a person would have the freedom to live anywhere in the country, some cost could be saved by living in out-of-town living centres.

Note that these figures do not include spending on recreational activities such as eating out, sightseeing, shopping and travel, among other things, that you may spend on a regular basis.

While these costs may seem prohibitively high, it is notable that they are in line with the minimum income criteria set by countries. For example, Portugal requires a minimum monthly income. 2.7 lakh (€3,040). This means that the cost of living in the country is within reach of anyone who meets the income criteria.