Cross-border remote work, commonly known as digital nomadism, is a burgeoning trend in Spain that is beginning to see specific legislative frameworks aimed at preventing labor abuses while simultaneously attracting highly skilled digital nomads.
This form of employment is particularly appealing to young professionals, whether freelancers or salaried workers, who possess technological expertise and hail from Nordic countries. Spain has emerged as one of their preferred destinations, sparking discussions regarding the social and economic implications of this labor movement.
Within this context, Spain signed the European framework agreement during the previous summer, which further develops EU regulations concerning habitual cross-border teleworking. This agreement seeks to establish better working conditions for Europeans working from Spain for companies based in other EU member states.
Additionally, the Social Security department has introduced a flexible criterion, effective from July 1, which applies to cases where a remote worker in another EU member state engages in occasional, time-limited work outside their usual service provision. In such instances, the remote worker is still subject to the legislation of their home country.
Both the framework agreement and the flexible criteria of the General Treasury of the Social Security (TGSS) provide specific regulations for a matter that has previously lacked such clear guidance.
Spain has become an attractive destination for a diverse workforce, especially those employed by multinational corporations, hailing from northern European countries, and often characterized by their technological or commercial backgrounds. This trend, while growing, still represents a minority.
Alfonso Caracuel, director of the consultancy firm Michael Page, highlights the need for further legislative progress to better accommodate the digital nomad trend in Spain.
BETTER CONDITIONS FOR DIGITAL NOMADS
Spain’s recent inclusion in the European framework agreement represents a significant improvement in working conditions for digital nomads. Under this agreement, the legislation of the state where the employer is headquartered will govern aspects such as salary and social contributions for remote workers. However, this applies as long as the working time in the worker’s country of residence doesn’t exceed 50%.
This development brings better conditions for foreign remote workers in Spain, and it’s noteworthy that as of June 30, the agreement has also been embraced by several other European countries, including Germany, Switzerland, Liechtenstein, the Czech Republic, Austria, the Netherlands, Slovakia, Belgium, Luxembourg, Finland, Norway, Portugal, Sweden, Poland, Croatia, Malta, and France.
José Varela, Head of Digitalization at UGT, points out that prior to this agreement, teleworking resembled a form of digital relocation. This often resulted in ‘labor dumping,’ creating unfair competition among companies in the same sector and country. However, with Spain’s participation in the framework agreement, this dynamic is set to change. Employers will now be required to remunerate workers based on the salary levels of their home country.
Cuatrecasas, a leading law firm, emphasizes that these new rules represent a significant leap forward. They provide a more secure and certain framework for companies to handle international remote work requests. This is especially important in a context where attracting and retaining talent has become a critical concern.
Overall, these changes are poised to benefit digital nomads and companies alike, providing a more transparent and secure environment for remote work arrangements.
VISAS FOR DIGITAL NOMADS
The passing of the Startups Act at the end of the previous year introduced measures aimed at simplifying the process for third-country nationals, often referred to as digital nomads, to obtain visas for international telework residence in Spain.
Data from the National Innovation Company (Enisa) reveals that by the end of August, more than 800 of these work visas for digital nomads had been analyzed. José Bayón, CEO of Enisa, shared this information during a digital economy congress. Spain has emerged as a prime destination for digital nomads, attracting an increasing number of talented individuals from around the world.
However, it’s worth noting that the impact of this measure included in the Startups Act has been somewhat limited thus far. José Varela, Head of Digitalization at UGT, points out that most of these visas have been requested by Russian remote workers, which could be attributed to the context of the ongoing conflict in Ukraine.
CAN DIGITAL NOMADS GENERATE ‘SOCIAL DUMPING’?
The potential for ‘social dumping’ is a concern raised in the context of the growing presence of digital nomads in Spain. At present, there are no official statistics available to accurately measure the movement of cross-border remote workers or freelancers who choose Spain as their destination. Consequently, quantifying their impact on specific areas remains a challenge.
While some regions like the Canary Islands and the Costa del Sol have initiated campaigns to attract digital nomads, it is difficult to determine the extent to which these campaigns have resulted in increased housing purchases for teleworking purposes.
One notable example is Malaga, a city that has seen a surge in housing prices since 2020, with average rental prices rising by 29.3% and sale prices by 24%, according to data from idealista.
While the presence of digital nomads can be appealing to many city councils due to the potential for higher-than-average salaries and increased income, there is a concern that if this trend becomes widespread, it could disrupt the real estate market. The majority of the local population may not have the purchasing power to compete with digital nomads, leading to potential issues of ‘social dumping’ in the housing market.
