Special Tax Regime for impatriates

The Special Tax Regime for impatriates in Spain, also known as “Beckham Law”, allows foreign employees who are moving to Spain to pay taxes as non-residents which, in some situations, may be a significant benefit. This measure fosters attractive conditions for attracting talent, qualified profiles and executives from abroad. The law was used by the famous English soccer player David Beckham while he lived in the country playing for Real Madrid C.F. and he was one of the first foreign celebrities to apply this law, hence the nickname. However, since 2015 this tax benefit no longer applies to professional athletes.

What is the Beckham Law?

The Beckham Law or Impatriates Law is a special personal income tax regime for those foreigners who, for work reasons, transfer their tax residence to Spain and, according to which, they are allowed to pay taxes as non-residents for a certain limited number of years. This regime may allow lower taxation for those who move to Spain to work and meet a series of requirements, offering a great attraction argument for Spanish companies in search of talent.

The main tax benefits of taking advantage of this tax regime are the following:

Fiscal benefits

    • Earnings from employment up to 600,000 euros per year are taxed as personal income at a fix rate of 24%. The tax rate for these earnings when they are above 600,000.01 euros is 47%.

Under this regime, all salaries and similar earnings received in any country must be included in this Spanish taxation scheme.

    • For other income, only those obtained in Spain are taxed. For example, it would not be taxed in Spain if you obtain abroad another type of income as:

–  Capital gains

– Income from movable capital (dividends, interests).

– Rental income

  • There is a maximum of 6 years during which this special regime can be applied, starting in the year of the concession and the following five.
  • With regard to the Spanish Wealth Tax, only assets located in Spain are taken into account.
  • This regime exempts from the obligation to submit the controversial Form 720.

Requirements to benefit from the Beckham Law

The abovementioned scheme must be applied for within a period of 6 months from the date of registration with Social Security or from the date that appears on the Social Security coverage certificate of the country of origin, in the case of international displacement. The deadline cannot be extended and does not admit exceptions, so it is very important to process the application within the deadline and accompanied by the corresponding application form.

Other additional requirements must be also met, such as not having lived in Spain within the previous 10 years.

You also need to have a formalized contract with a Spanish company, or a letter issued by the company related to an international displacement, to prove that you are moving for employment reasons.

It should be mentioned that the current Bill for the Ecosystem of Emerging Companies, known as the Startups Law, which implements the figure of the so-called «digital nomads», proposes a series of substantial modifications, among which is to reduce from 10 to 5 years the period during which you cannot have lived in Spain, previous to the application to this regime. It also opens the door to being able to extend the limit of years that can be enjoyed by this special tax regime from the current 6 years (the year that is requested and the following 5) to 11 years (the year that is requested and the following 10).

 

Finally, the benefits of the Beckham Law, although attractive, require certain procedures and knowledge that must be discussed with a tax advisor. Our legal advisors are up to date with all legislative developments regarding this special regime for impatriates and will be able to provide you with all the procedures and information needed, based on your specific situation.

 


Sobre el autor:

Alejandro Guayta Pujol

DiG Abogados