The Spanish Directorate General of Taxes, in its binding ruling V2223/2022 dated October 25, 2022, which confirms the criteria of V3286-17, has determined that non-resident entities that do not operate through a Permanent Establishment are not required to withhold taxes on employment income paid to their workers who are residents in Spain.
Thus, in the case where an employee of a non-established company is relocated to Spain to perform their work (“digital nomad”) and becomes a tax resident in Spain, the employer company will not be obliged to withhold personal income tax (IRPF) on the employment income paid, provided that the company does not have a permanent establishment.
Access the full binding ruling HERE