Comparing Digital Nomad Visas in Europe: Croatia, Portugal, and Spain
Those who have chosen a nomadic lifestyle must often stop to carefully consider their next move. When comparing digital nomad visas in Europe, you must ask yourself: where do I want to go next? Which country has the best opportunities for me? Each digital nomad visa presents unique benefits and challenges. Knowing which opportunity serves your lifestyle, your work and your family best is crucial. We begin with the framework of “fast, easy or cheap”. Where Croatia is cheap and easy, but not fast; Spain is fast, but neither cheap nor easy, and Portugal is none of these. Read on for a detailed comparison of some of a few of Europe’s most popular digital nomad destinations.
Minimum Income Requirement (individuals and dependents)
Among the many reasons digital nomads love countries like Croatia, Portugal and Spain is the appeal of living a mediterranean lifestyle, enjoying mild weather, a delicious & nutritious diet, a slower, less-stressful pace of life, safety & security, and of course, affordability, especially in comparison to North America and Northern Europe.
Indeed, costs can be lower in these countries, but so are local wages. While the minimum wage in each ranges from as low as €820/month to as much as €1134, the truth is that it is incredibly difficult for anyone – much less a foreigner who lacks first-hand knowledge of how to maximize their money locally – to live well on the minimum income.
For this reason, each country’s digital nomad visa/residency permit requires an income that is some multiple of the local minimum wage. Spain’s visa requires an income of 2 times the monthly minimum – a total of about €2500/mo, for at least 3 months. In Portugal, digital nomads must substantiate that they’ve earned at least 4 times the monthly minimum of €820 – a total of €3280/mo – for at least 6 months. Croatia’s approach is somewhat different, in that they require 2.5 times the average monthly wage, rather than the minimum. In 2024, that amounts to €2540/mo for 6 months.
Notably, neither Portugal or Spain offers digital nomads whose earnings are substantially below these thresholds to supplement with savings. Croatia, however, does. In fact, for self-employed digital nomads who are in the process of building a business that is not yet profitable, it is possible to apply for a residency permit purely on the basis of savings. This option requires a minimum balance of about €30,472.
Acknowledging that not all digital nomads are freewheeling young folks with few cares in the world, Croatia, Portugal and Spain alike make it possible for those who are partnered or parents to bring their whole family along. Of course, each of them requires additional income to support these dependents. In Croatia, an additional €254 is required for each family member, while Spain requires €935 for a partner or spouse, plus €315 per child. In Portugal – where the individual income requirement is highest – so too is the amount needed to sponsor family members, at €1640 for a partner or spouse, and €984 per child.
Application Process, Processing Time and Fees
The biggest miss for most countries that have introduced digital nomad visas and/or residency permits is that they’ve done so without taking the time to understand their target market. Digital nomads tend to be travelers at heart; a bit like long-term tourists, if you will. For many, an ideal digital nomad program might be akin to an extended tourist visa, offering an opportunity to spend extra time in a country without getting too entangled with local bureaucracy.
In practice, most programs are modeled after each country’s immigration process, requiring reems of paperwork, financial disclosures and criminal background checks, most of which require an apostille or notarization, which are both costly and time-consuming.
That said, not all digital nomad programs are created equal and some are much more accessible and easy to navigate than others, with regards to when, where and how to apply.
In Portugal, there are technically two options available: One intended for
short-term digital nomads, who would like to live in Portugal for up to 1 year, and one
intended for long-term remote workers who would like to live in Portugal for 2 years or
more. In practice, however, Portugal issues the longer of these two visas to almost everyone, with few exceptions.
An obvious example of ignoring what digital nomads want and need, Portugal’s visa can ONLY be obtained from ones’ country of origin or residence, via an in-person interview that takes place at a consulate or the office of an outsourced service provider like VFS Global. Confoundingly, Portugal requires digital nomads to secure a twelve-month lease that is registered with the local tax authorities prior to application and approval, which is at odds with the fact that applications can not be submitted locally. The result is that many must sign (and often pay for) a long-term lease without knowing whether their application will be successful or when it will be issued.
Processing time is variable and unpredictable, taking as many as four months in some cases. Once approved, applicants must provide their passport to the consulate in order to have the visa manually inserted, leaving them without a valid travel document for some period of time.
Spain’s program offers two application paths. A 1-year visa issued to applicants who apply outside of Spain, and A 3-year visa issued to those who apply after arriving in Spain, prior to the expiration of their tourist visa.
While offering two options is an improvement over Portugal’s in-person only process, that’s where the flexibility ends. Indeed, Spain’s application process is by far the most complicated of these three countries, so much so that it’s uncommon for anyone to apply without the aid of an attorney or immigration expert. Among the more onerous requirements are a copy of the applicant’s college degree and/or resume to substantiate that they are “qualified” to do whatever work they do for a living, a letter granting them “permission” to work abroad from their employer – or in the case of self-employed applicants – their primary client, along with a Certificate of Good Standing from the state that the company is registered in. Notably, only Spain requires that supporting documents be translated into the local language, and many of them must be done by a sworn translator – further adding to the expense and inconvenience.
Meanwhile, Croatia welcomes applications online or upon arrival, requiring a reasonable amount of supporting documentation, including proof or purpose to support remote work, substantiation of sufficient funds, a criminal background check and valid travel insurance. While one does need a Croatian address to apply, this can be almost any kind of accommodation, including an AirBNB or a hotel, meaning digital nomads do not need to assume the financial risk of signing a long-term lease without knowing if they’ll actually be able to live there long-term.
Renewability, Pathway to Permanent Residence and/or Citizenship
As previously noted, one of the most contentious questions when it comes to residency
and/or visa programs for digital nomads is the extent to which they’re intended for location independent professionals who live and work nomadically, versus aspiring immigrants who work remotely.
Croatia’s program is obviously designed with the former group in mind, as evidenced by the fact that it is limited to stays of up to 1 year upon approval, is not renewable and provides no pathway to permanent residency and/or citizenship.
On the other hand, the latter group may prefer Portugal or Spain, as their digital nomad visas are renewable and offer individuals who meet and maintain all of the eligibility requirements for a prescribed period of time the opportunity to apply for permanent residence and/or citizenship.
Financial Implications and Tax Considerations
Living abroad for any length of time is an exciting prospect, but there are very
real financial implications and tax considerations that digital nomads would be well
advised to remain mindful of.
While digital nomads often applaud the excellent education & healthcare systems and strong safety nets that are common across much of Europe, many overlook the specifics of how these programs are funded and the fact that they too will be expected to contribute, with few exceptions.
As we’ve already established, Spain’s application process is by far the most rigorous of these three nations’ residence programs for digital nomads, but one requirement is especially problematic for certain applicants: Namely, the need for a Certificate of Coverage under the Social Security System of the applicant’s country of origin or residence, when the applicant is formally employed by a company. This presents a unique challenge for applicants from the USA, as this document is difficult – if not impossible – to obtain.
The Social Security Administration is on record as stating that they will not issue this document to individuals. Instead, it must be requested by their employer, to support an international transfer to a new or already established Spanish office of the company. This has tax implications for employers, as they are then required to contribute to the Spanish Social Security system at a rate of 30.4% of the employee’s annual salary. This is significantly higher than the 7.65% that employers contribute to Social Security and Medicare in the USA, which creates a huge disincentive for employers who might otherwise support their employees’ intention to live and work remotely in Spain.
The silver lining is that digital nomads whose employers are required to make these
costly contributions to the Spanish Social Security system are the only digital nomads
who have any hope of benefitting from the so-called “Beckham Rule,” in which their income is taxed at a flat rate of 24%.
Self-employed digital nomads are not eligible for this favorable tax treatment, so their income is taxed according to Spain’s progressive system, with marginal rates ranging from 19-47%.
This is in addition to another tax – known as Autonomo – which is best described as contributions the self-employed make to Spain’s Social Security system. This is income-based and for 2024, will cost an additional €230 – €530 per month. Notably, newly registered Autonomos do benefit from an abatement in their first year of tax residency, during which they will pay a flat fee of €80 per month, regardless of income. This fee is further subsidized in some regions, such that first-year autonomos incur no fees at all. These include Madrid, Andalucía, Baleares, Canarias, Extremadura, Galicia, La Rioja, Madrid and Murcia.
In Portugal, taxation is similarly complex, often costly, and increasingly ambiguous, as the nation implements major changes to their infamous Non-Habitual Residency (NHR) tax schema. For many years, the NHR has offered favorable tax treatment for certain foreigners, including a flat tax of 20% on earned income for individuals in “high value added” professions. However, in late 2023, the government announced that the program would stop accepting new registrations at the start of 2024. More recently, it appears that NHR will be replaced with a new tax schema known as the Incentivized Tax Status program (ITS), which will have more rigorous requirements and limited benefits for registrants. Because this program has not been approved or implemented as of March 2024, questions abound about any real or potential impact on Digital Nomads working for Portugal, and it’s entirely possible that there will be no benefit at all to many Digital Nomads.
Meanwhile, in Croatia, the benefits of residency under the Digital Nomad Permit program are clear: All earned income is exempt from taxation for the duration of the permit’s validity. Notably, other types of income – dividends or interest, for example – may be subject to tax.
As always, it is advisable that all digital nomads seeking information about the tax implications of obtaining residency in a new country consult with a qualified financial advisor or tax professional locally.
Whether it’s the minimum income requirements, the application process intricacies, or the financial implications and tax considerations, there’s much to weigh in deciding the ideal destination for your nomadic lifestyle. Using these detailed insights into the nuances of digital nomad visas in Croatia, Portugal, and Spain, you’ll be equipped to make an informed decision that aligns with your professional aspirations and lifestyle preferences.