Benefit From the Beckham Law in Spain
Get legal advice on how to apply for Spain’s Special Expat tax regime, known as the “Beckham Law”, and enjoy lower income taxes locally and globally
The Beckham Law is a special tax regime for individuals who come to Spain if they have a job offer in Spain. Whether it’s for a new company or being relocated by their existing foreign employer. Those who qualify for the Beckham Law are taxed at a much lower rate than Spanish citizens. You can even apply for it if you are appointed as a company director and own fewer than 25% of the company’s shares.
What is the Beckham Law?
The Beckham Law allows foreigners who move to Spain can pay a flat tax of 24% on their Spanish earnings rather than a progressive tax on their worldwide income, which can be as high as 45%. It’s known as the Beckham law after a famous British sportsman, David Beckham, who was one of the first people to benefit from it.
People who want to live and work in Spain can pay income and wealth taxes as if they were non-residents for the first six years, thanks to this law.
How do I Qualify for the Beckham Law?
You have six months to submit the application, starting from the day you were registered with the Spanish Social Security as an employee, to apply for the visa.
You must complete Form 149 and file it with the Spanish tax agency. This application process also requires your:
- Social Security number
- Passport and NIE number
- An employment contract
Once it’s approved, you can benefit from advantageous tax rates for six years. However, you must file a tax return each year as part of the arrangement.
How Can a Lawyer Help Me?
In order to be able to apply with greater guarantees to this special regime, a lawyer will know exactly what documents you need to provide and whether you meet the necessary requirements.
In addition, many times the tax authority sends a letter requesting extra information or asking you to justify some documents, so a lawyer will help you to correctly answer these requirements in order to obtain this special regime.
Another benefit of having experts in the field is to avoid possible penalties for poor compliance with the requirements of this system.
Our immigration and tax attorneys can also help with your tax preparations and connect you with certified public accountants. We have network partners and estate agents who work with our real estate team if you plan to buy property in Spain.
¨We will be with you each step of your journey.¨
– Immigration Team
What are the requirements?
1. You have not been a Spanish Tax Resident for the last ten years. This is the main requirement for all applicants.
2. You’re moving to Spanish territory because you:
- Have a new employment contract.
- Are relocating with your current overseas employer to a Spanish subsidiary or branch.
- Are being appointed director of a company. You will own, directly or indirectly, fewer than 25% of the company’s shares.
3. That you are not working as a freelancer and earning an income actively.
However, it is possible to earn an income from overseas work from a foreign country if that work is less than 15% of your total income.
What Tax Breaks Can I Enjoy?
Beyond income tax breaks, there are also advantages for capital gains and dividends. Real estate assets are only taxed if they are Spanish properties, so this protects your international property portfolio. However, there is a 1.8% wealth tax on your net worth for assets that are worth more than €3 million.
Dividends outside of Spain are not taxed compared to those within Spain that are taxed at between 19% and 26% annually. However, you may have to pay capital gains tax in the country where the assets are held or were sold.
The main benefit is that the person only pays tax on their Spanish income, which is capped at 24% up to €600,000 annually. If the income is higher than this threshold, then it is taxed at a flat rate of 45%.
There is no impact if you spend more than 183 days a year in the country as you will be taxed at under the rules that apply to non-residents.
You are effectively a non-resident for tax purposes.
How Long Does the Approval Process Take ?
As a general rule, this process usually takes between one and two months.
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Frequently Asked Questions
According to the law, your arrival in Spain must be a consequence of the new employment contract or relocation from your current employer.
Although it is normal that you arrive in Spain sometime before the start of your contract (to find housing and arrange schooling for children, among others), Spanish tax Authorities can dig deeper and question your arrival date and when did you get the job offer. In case your arrival in Spain was before the start of the job negotiations or the job offer, they could deny the Special Expatriate Tax Regime.
Applying for this regime is considered as beneficial when you will be perceiving employment income over 55.000 Euros or when you have foreign non-employment income (rental income, dividends, interest, capital gains) that you would like to avoid being taxed in Spain. Also, your assets abroad will not have to pay Wealth Tax and/or file the Informative Form on Goods and Assets Abroad.
Currently, it does not. Your Spouse will have to submit a regular Spanish Personal Income Tax return, and, if applicable, a Wealth Tax Return and an Informative Form on Goods and Assets Abroad.
However, according to the project of the Start-Ups Law in Spain, it is being considered that the regime extends to the spouse of the applicant for the regime, and extends for 10 years after the first year of tax residency in Spain.
This Special Expatriate Tax Regime lasts for the first year that you are a Spanish Tax Resident and the following 5 years, as long as you keep being employed.
Yes, although the law does not specify how long you can be out of work, it is advisable to stay as little time as possible and switch immediately from one job to another.
You can’t take advantage of double taxation treaties. However, you are effectively a non-resident for tax reasons.