Assume that a foreign national employee of a foreign company wishes to work remotely for a period of time in your country performing services exclusively for the foreign company and not interacting with the local market in your country.

Work authorisation

A. Is work authorisation required? If so, please provide a brief description of the type of visa, procedure, processing time, etc.

Recently the Spanish legislation has regulated this increasingly widespread situation of international remote workers, creating a residency authorization for those who come to Spain to work remotely for companies located outside the national territory, by means of the exclusive use of computer or telematic means and systems.

They will be able to request the visa or the authorization of remote work those who are qualified professionals who prove to be graduates or postgraduates of universities of recognized prestige, professional training and business schools of recognized prestige or with a professional experience of at least three years.

The following requirements must also be met:

• The existence of a real and continuous activity for at least one year of the company or group of companies with which the employee has an employment or professional relationship.
• Documentation proving that the labor or professional relationship can be performed remotely.
• In the case of an employment relationship, it must be proven the existence of such relationship between the employee and the company not located in Spain for at least the last three months prior to the filing of the application, as well as documentation proving that such company allows the employee to perform the work activity remotely.
• Not to be illegally in Spanish territory.
• To be older than 18 years old.
• Not to have a criminal record in Spain and in the countries where he/she has resided during the last two years, for crimes foreseen in the Spanish legal system. Additionally, a declaration of non-existence of criminal record for the last five years must be submitted.
• Not to appear as rejectable in the territorial space of countries with which Spain has signed an agreement in such sense.
• To have a public insurance or a private health insurance arranged with an insurance company authorized operating in Spain.
• To have sufficient economic resources for themselves and their family members during their period of residence in Spain.
• Pay the fee for processing the authorization or visa.

The maximum term of validity is one year, unless the period of work is less, in which case the visa will have the same validity as this one. The visa for international teleworking will constitute sufficient title to reside and work remotely in Spain during its validity.

In this sense, in the term of sixty calendar days before the expiration of the visa, the teleworkers of international character who are interested in continuing residing in Spain will be able to request the authorization of residence for international teleworker, as long as the conditions that generated the right are maintained.

Therefore, those foreigners who are in Spain on a regular basis or who have accessed by means of the international telework visa, may apply for a residence authorization in order to work remotely for a company located abroad, which will be valid in the whole of the national territory.

The validity of this authorization will have a maximum validity of three years unless it is requested for a shorter period of work.

The holders of this authorization may request its renewal for periods of two years as long as the conditions that generated the right are maintained.

Risk of 'permanent establishment'

B. Is there risk of 'permanent establishment' consequences for the foreign company by virtue of the remote worker’s activities?  If so, what are the main factors determining the exposure.

If the employee only works from Spain for a foreign company and does not interact with the local market, the risk of potentially creating a permanent establishment is low.

The main factors to consider when determining if a situation constitutes a permanent establishment are:

• The existence of a place of business – any premises or facilities that are used for carrying out the economic activity of the company, whether (or not) they are used exclusively for this end.
• The place of business must be "fixed" – although currently, a certain mobility of the place of business is admitted, the fact that a certain degree of permanence in time, in the territory of the State, becomes more relevant.
• The activities of the company are carried out through the fixed place of business – this requires that the physical space of the place of business is effectively used for the development of a business activity.

Local social security and other payroll requirements

C. At what point and under what circumstances would the remote worker become subject to local social security and other payroll requirements?  Can such requirements be fulfilled by a foreign company, and if so by what mechanisms?

If there is a bilateral or multilateral Social Security agreement with Spain, the employee's status as a posted worker must be accredited by means of a certificate of Social Security coverage in the country of origin, so that he/she does not have to be registered in the Spanish Social Security system, pursuant to the terms established in such agreement. On the other hand, if there is no bilateral agreement between the country of origin and Spain, the employee must be registered in the Spanish Social Security system.

Local employment law requirements

D. At what point and under what circumstances does the remote worker become subject to local employment law requirements such as is wage-hour, local holidays, annual leave, maternity leave, disability leave, protection against unfair dismissal, etc.

It should be noted first that the recently published regulation only makes notes on how to obtain the permit, but not on the applicable law. Likewise, no court has yet been able to rule on this matter, so it is likely that in the coming months we will be able to update interpretative criteria on this visa.

However, for the time being, we can state that regarding the applicable law, in principle the governing law should be the law chosen by the parties in the employment contract in accordance with Article 8 of the Rome I Regulation.In this sense we recommend that either in the employment agreement or in a separate agreement it is made very clear that it is the employee who wants to undertake this modality of work and that the applicable law will continue to be that of the place where the employer is located and not that of Spain.

Remote foreign worker

E. Are there special requirements governing remote work in your country which would cover the remote foreign worker?

Spanish Employment Law minimum rights (working hours, health and safety, annual leave, minimum wage...) will have to be respected if the employee is providing services here, however these do not include specific remote work rules.

Income tax

F. What is the employee’s exposure to local income tax, and under what circumstances is the foreign employer required to arrange for withholding of income tax?

The digital nomad visa offers certain tax advantages since it can be subject to Non-Resident Income Tax (IRNR) instead of the regular income tax (IRPF) paid by permanent employees in Spain. However, each situation should be studied on a case-by-case basis.

Claim for workplace injury

G. Would the remote worker be entitled to bring a claim for workplace injury in your country?

The employee could be able to do so, however it should not succeed, generally. As stated in Art. 8 of the Rome I Regulation, the employment contract will be governed by the law chosen by the parties, which should be specified in the same employment contract.

However, it is important to comply with Spanish health and safety legislation as it is part of the minimum employment rights that need to be guaranteed by the employer.

National healthcare system or insurance

H. Would the remote worker be covered under the local national healthcare system or insurance?

No, because the employee will not, technically, be working in Spain. Consequently, he will not be registered with the Spanish Social Security system, and this is actually the reason why one of the requirements needed in order to obtain the authorisation is to prove that he has health insurance and through an insurer that is able to operate in Spain, considering the fact that he will not be registered in the national healthcare system.

Data privacy and security

I. Is a foreign employer subject to data privacy and security requirements regarding protection of employee personal information for a foreign employee working remotely in your country?

Regarding this aspect, the international regulations are not altogether clear and are difficult to ascertain, therefore, the particular case should be analyzed taking into account the specific details of the hire, the employer, the nationality, the location of the data controller, and so forth.

Foreign remote worker

J. Has there been any litigation or specific law or regulation regarding the foreign remote worker in your country?

Yes, as indicated under question number 1 above. However, please note that this is a very recent regulation and surely more practical interpretations of its functioning will emerge over the coming months.

Citizenship

K. Would any of the above answers change if the remote worker (a) is a citizen of your country, or (b) engages in activity interacting with the local market?

a) If the remote employee is a citizen of Spain, they will not be eligible for this type of work authorization since it is exclusively foreseen for non-EU citizens.

b) If the employee was to engage in activity with the local market, the first problem likely to arise would require a determination as to whether (or not) there is a permanent establishment here in Spain. Should any doubts or uncertainty surface as a result of this, employment rights could probably be requested by the employee although, theoretically, the company should be successful still in applying the legislation designated in the contract.