It is not a hoax, it is already done in Germany, Italy or Austria and the prospects are that the Canary Islands will be the first area in Spain where harsh tax control measures are applied on digital nomads who do not pay taxes despite the pressure that the real estate developers who are dedicated to this medium and long-term market segment. But there are few doing real estate business and many families expelled from non-tourist centers. Families have been expelled from residential areas. At the same time, the owners of vacation homes generate tourismphobia and damage the coexistence of the Canarians with those who come for a tour operation. That is why in the south of Gran Canaria there are no digital nomads with more apartments available than in Las Palmas.
The real estate bubble of digital nomads in the Canary Islands can burst immediately since the Canarian Autonomous Police or Civil Guard, which have powers over taxes, receive the order to review what so many Europeans are doing in bars glued to a computer fleeing the cold in winter. in the Canary Islands and not declaring the income generated by the activity. The recipe to be applied is the same as in countries of origin such as Austria: up to 10.000 euros for the tourist and for the landlord given that, legally, he has an illegal foreign employee in a home he owns. The most affected are the homeowners who have made renovations to sell them to tourism and will have to go back to look for the quiet islanders.
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Although in Las Palmas they blame digital nomads and the south of Gran Canaria has for the moment gotten rid of this segment of real estate business disguised as modern and modern lifestyle, there are already hospitality companies that prohibit operating with personal computers in their businesses , many European employees combine work and vacation in the Canary Islands using private infrastructure for hours without generating expenses. The authorities are preparing a series of measures on holiday housing in the Canary Islands for before June 2024 because there are nomads who do not pay taxes for their activities and at the same time their presence generates the expulsion of families from the real estate market. From fines to taxes and social security contributions, this can quickly get expensive. And each country has its own rules: in Central European areas, if a digital nomad is arrested without a work permit, he must pay up to 3.000 euros in fines and house arrest until he declares everything he has been earning during his stay.
In Italy, where a good part of the digital nomads who come to the Canary Islands come from, the Guardia di Finanza in gray uniform can approach a Canarian tourist and ask to see the A1 certificate in addition to asking many questions about the scope and content of the work. so many days in the same area without talking to locals, that is, the things typical of tourism. Do you come on vacation to be in a coworking or at a bar table? If you do not have the A1 certificate from the holiday home, coworking or bar you go directly to the police station. Fine of 2.000 euros. In addition, house arrest is imposed until the company that purchases services from the digital nomad has also paid a fine of the same amount. The Police are not stupid and will check the PC to analyze the usage history.
In France the fine would be 3.300 euros and in Austria up to 10.000 euros. Other countries first arrest the unregistered foreigner and then, after an expensive legal process, charge high fines, social security contributions and taxes. In some cases, the employer is even accused of running an illegal business establishment that, in addition to illegal employment and insurance fraud, also embezzles taxes on sales, capital gains and business operations. For example, the employer is usually required to withhold foreign income tax and must also prepare the corresponding payroll.
Then it becomes very expensive for the company because there is a serious risk of double taxation. Furthermore, reputation in the host country suffers because authorities proudly report caught tax evaders to local media as if they were their own success. The information is then unflattering for the employee and his employer. General statements regarding the establishment of a permanent establishment cannot be made because an individual case-by-case assessment of the country, the employee's role and the activity carried out is usually necessary.
These examples illustrate the dangers that arise when employees with a German employment contract work abroad. In principle, there is freedom of movement within the EU, but this is not possible without the A1 certificate. The document confirms that social security contributions and taxes are paid in Germany and that the employer is also based there. In other countries, in addition to the visa, a work permit is also required. Some countries expect social security contributions to be paid.
Within the framework of digitalization, working from the Canary Islands under a palm tree is also a technically viable option for more and more employees. Human resource management calls this form of activity work. Everyone can decide whether working under the palm trees is really a combination of “work” and “vacation”: work and vacation. In principle, however, the costs of bureaucratic procedures and any additional insurance are borne by the employees themselves. It is also important not to exceed certain deadlines. Otherwise, sun-starved overseas employees will be subject to taxes and social security contributions. Some people do not undertake this change of location because of the sun, the beach and the sea, but are forced to cross borders for family reasons.
Several service providers and even the tourism industry have discovered that working remotely is an additional business. Online platforms offer the possibility of planning employees' work. TUI has founded its own department that offers remote employment in the Canary Islands with local payroll and taxes shared between the Canary Islands and Germany through various Robinson or TUI Blue subsidiaries.
