Question
I’m considering a move to Spain via the Spanish NLV route, but I have an interesting (to me) quandry. I’m a US physician and I want to keep working, and I do qualify for NLV without continuing to work, but my licensure wouldn’t carry over to Spain.
So I would have to keep working sporadically in the US, probably flying back every 6-8 weeks and doing a block of shifts in the US. I believe the NLV requires me to spend at least 180 days in Spain, which I think I could meet with that schedule although it may be a challenge.
Reading article 7 of the US-Spain Tax Treaty, this seems to apply to me as a physician and states “… such income may be taxed in the other Contracting State if such resident has or had a fixed based regularly available to him in the other Contracting State for the purpose of performing those activities. In that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State.”
I’m wondering if I were to work in say, Delaware, maintain an abode in Delaware, would my income taxation from this revenue be solely taxable in the US and not Spain? Or does the language of the treaty imply a system more akin to this — my tax rate in the US is 30%, Spain’s is 40%, so Spain credits me the 30% I owe to the US and taxes me the difference of 10%? I have the option of rendering my services as a business/C Corp as opposed to a sole proprietor if that makes a difference.
Answers
These are the answers of some Facebook group members:
”If your work in the US is less than 6 months a year but is regular and you show a residence there, you should qualify to keep that money taxable in the US. However, you should talk to a good accountant here in Spain and in the US to verify”
”You really need tax advice b4 applying for the visa as to what the tax implications would be. And what residency is best to obtain”
”I would first consider that NLV is being denied because people haven’t left their jobs. NLV is intended for retirees or those with the means to support themselves without working. Some consulates even go as far as to require affidavits indicating a resignation”
”If you want to live in Spain for more than five years, then you need to spend less than ten months outside Spain in those five years. If you exceed that total, you will be denied permanent residency at the five-year mark”
”Be careful. I read somewhere that if you intend to apply for Spanish residency when your five-year NLV period is up, you can only be outside Spain for a total of 10 months during those five years”
”Non-lucrative means not working anywhere. Not Spain and not the US. If you are of working age, you will need to prove receipt of a pension or provide a termination letter from your employer stating that you will no longer work for that company or, in case of self-employment, you will need to provide an affidavit before a Notary stating that you agree not to work while residing in Spain. In the case of retirees, the applicant must be a beneficiary of a State pension in convertible currency or be a beneficiary of a life annuity, not capitalizable, payable by a public or private institution in convertible currency and/or investment accounts. Attach bank statements from the last three months and a copy of the last tax return. Residency applicants cannot have/leave loans or mortgages in the United States when applying for residency in Spain”
”I think you can leave to work somewhere else, as long as you meet the residency requirements to renew. Regardless of whether you’re a business or working as an employee, you’re going to “be required to report” your worldwide income and be taxed on it..by outrageous amounts. I don’t think anyone here has your situation, so consulting a few professionals and seeing what the consensus opinion is, would be a good idea…I’m sure they won’t all give the same answer”
”We just applied from Canada for our NLV and one of the major requirements was “proof of no longer working”. I have been retired for 10 years, but my husband is still employed at the time of application. He has given his employer 3 months’ notice for retirement (we hope to be living in Spain in 4 months’ time) and we had to provide a copy of his letter of resignation, an acknowledgement letter from his employer stating what his last day of employment would be and a copy of the application he has made for his government pension”
”You ask very good questions, But residency is Spain is ultimately designed to trigger tax residency. That’s why the NLV is so limited in scope and prohibitive of remunerative work. The only option, in this case, is a golden visa or getting very creative with a C-corp and taking your chances with the Spanish tax authorities”
”As a couple of other people have alluded to, you might want to seriously consider looking into residency by investment, aka the “golden” visa. This is still available in Spain, although it’s being curtailed in Portugal. You need to purchase the property (for cash) worth more than 500K€ … only the first 500K€ must be cash, the rest can be a mortgage. The advantages of this visa are numerous. Your in-country time requirement is reduced to one day of each calendar year; you don’t become a tax-paying resident unless/until you’re a resident in Spain for 183 days out of each calendar year. You can bring other family members, even elderly relatives. And most importantly for you, there are no conditions placed upon your activities — you can work anywhere you please, come and go, or just be retired if you like. If you have the funds, this sounds like something that might suit you better. If it’s not realistic for you, but you have enough savings to qualify for the NLV, you’d just have to wait until you’re ready to hang up the ol’ stethoscope. In the meantime, there’s no law against buying a condo in Spain and staying there whenever you like on a Schengen visa waiver. (90 days allowed in the Schengen zone out of every 180 days, rolling, which is why people call it the “Schengen shuffle”!)”
”NLV is for non-working. However, the ambiguity is that you aren’t allowed to work for a Spanish employer. Although Spain has a double taxation agreement with the US, this type of work complicates it. Quite a unique scenario for which you definitely need a tax consultant versed in this area”
”N L V means exactly that, you are not allowed to work as far as I’m aware, anywhere, you might get away with it for a while but they will eventually catch up with you when you file a tax return, if and when you get caught they will nail you to the floor and your chances of obtaining any kind of visa to live in Spain will then be zero!”
”I believe as part of passive income you can receive money through investment, rent or employment on the NLV, as long as you are not actively involved in that employment and your hand off. In addition, as others have said, you cannot get PR in 5 years if you are out of the country for more than 10 months in that time frame. The NLV probably isn’t the right visa for you, but it may be good for a spouse or civil partner and family if they don’t work. If you go to the website of the Spanish Consulate that covers your state, you could look up your visa options to see if there is one that’s a better fit. Barring that, you are allowed to visit up to 90 days in every 180 days in a given year”
”Check with the Citizens Advice Bureau on all the Visas available. Also, check with a Spanish Immigration Lawyer on the other types of Visas or the Consulate closest to you and/or the Government of Spain Website”
”You can hold an online practice with patients in the United States. You can’t work in Spain, but you can work for U.S. patients/hospitals. Your income must be filed in both countries. Get a dummy tax return completed to see the hypothetical breakdown with the treaty”
In conclusion, the question of whether a physician working in the United States while maintaining an abode there will have their income solely taxable in the United States or subject to a different taxation system under the US-Spain tax treaty remains unresolved. While some Spainguru’s Facebook group members provided insights and suggestions, it is evident that the situation is complex and requires professional advice from accountants, tax consultants, and immigration lawyers who specialize in US-Spain tax matters. The ambiguity surrounding the non-lucrative visa (NLV) and its limitations on remunerative work further complicate the issue. Considering alternative options such as residency by investment, commonly known as the “golden” visa, may provide more flexibility for work arrangements while meeting the requirements for residency in Spain. Ultimately, seeking expert guidance and conducting a thorough analysis of the tax treaty provisions and visa options is crucial for individuals in this situation.
