The Beckham Law: a special tax regime for foreign professionals living in Spain to save on taxes
What is the Beckham Law?
The so-called "Beckham Law" was designed to attract highly qualified international talent. It is a special tax regime applicable to foreign workers who move to Spanish territory.
The regime essentially allows the applicant to be treated as a non-resident for the first six years, even though they reside in Spain, meaning they would only pay a fixed income tax rate of 24% for their annual earnings below € 600,000. Above that amount, they would be tax at a higher rate of 45%.
Who can opt for this law?
Those who move to Spain and meet all of the following requirements:
That they have not been a resident in Spain during the past 5 tax periods / years prior.
That the displacement to Spanish territory occurs as a consequence of an employment contract.
That they do not receive income that would be classified as obtained through a permanent establishment located in Spanish territory.
Procedure and how it’s done
We must begin by assessing the particular case to see if they qualify. If favourable, we would then need to communicate to the Agencia Tributaria that they will opt for this tax regime by completing the Modelo 149. It is essential to submit the application within the first 6 months from the official starting date.
Once the form is submitted and approved, the Agencia Tributaria will provide the applicant with an accredited document. Each year when filing income tax returns, the applicant must submit their Personal Income Tax return using a special form (Modelo 151), providing the accredited document received from the Tax Agency.
What benefits and what disadvantages does it have?
The most important benefit under this special regime is the ability to pay a fixed tax rate, especially for those who have higher income. The applicant will also benefit from applying the wealth tax in relation to existing properties, accounts and income in Spain and not to those which may exist in other parts of the world.
Do keep in mind, one of the disadvantages of this regime is that they would not able to deduct common income tax expenses, such as having minors living with you, deductions for primary residence and double taxation agreements.
For how long can one benefit from this tax regime?
Once the option is communicated, the applicant will be able to benefit from the Beckham Law and its tax advantages for a total of six years (the current year and the following five years).
Why us?
With English speakers at your disposal, we work with you in the language you are comfortable in. To facilitate the process, we also work directly with your company to request all documentation, so you do not have to lift a finger. If you want to benefit from the advantages of this special regime, send us a WhatsApp or call us at +34 610 632 963 or write to us at contact@nietojones.com.
