How Spain’s Beckham Law is Redefining Corporate Relocation
Spain’s Impatriate Law, commonly known as Beckham Law, comes with a host of advantages for those residing and working in the country. To get to the specifics, this regulation allows employee annual income up to 600,000 Euros (£505,261) to be taxed at a flat rate of 24% for 6 years. Corporate professionals looking to benefit from this Spanish law must make a successful application to the Tax Agency.
Beckham Law: Historical Context
The Special Expats’ Tax Regime (SETR) is a Spanish fiscal policy designed to attract top-tier talent into the country. The regulation came to be called ‘Beckham Law’ after the English footballer, David Beckham, who was among the first to benefit from it after joining Real Madrid.
Within the complex framework of Spanish taxation, where tax rates can soar up to 45% in Madrid and 54% in Valencia, Beckham Law offers a more manageable tax cap of 24% on incomes up to €600,000. Since January 2023, the eligibility criteria have been further expanded to boost Spain’s thriving start-up landscape. While living in Spain after Brexit may have initially seemed challenging, it certainly is more attractive now.
Beckham Law: Eligibility Criteria
There are certain requirements that must be met if you’re looking to claim the tax benefits under Beckham Law.
- You should not have been a tax resident in Spain for the five years prior to relocating for work.
- You should relocate for work (including remote roles), hold a job offer from a Spanish employer, and have the right visa (if applicable) prior to entry. Check visa requirements on the UK Government’s website.
- The majority of your professional work must be carried out in Spain with activities abroad being limited to 15%.
- Your employer can be either a Spanish or a foreign entity, however, your income should not be attributed to a permanent establishment in Spain.
Please note that the conditions outlined above extend to the applicant’s spouse and dependent children under the age of 25, as well as elderly or disabled parents who move with the taxpayer within the first year of the application.
Beckham Law targets highly qualified professionals who offer services to start-up companies or are involved in training, research, development, and innovation (R&D&I) activities, with at least 40% of their income generated from these services.
Not all professions qualify for this Spanish regulation. This includes professional athletes, freelancers, self-employed individuals, and directors with more than 25% stakes in Spanish companies (unless you hold a start-up/entrepreneur visa).
How to Apply
You need to make your application within six months of arriving in Spain or registering with Social Security, whichever is first. You will need your passport, employment contract, social security number, and NIE (foreigner ID number). Attach these documents with completed and signed copies of Form 149 and Form 130.
Processing times could be anywhere between 10 days to 2 months. Once your application has been successful, you will receive a certificate of approval which you must present to your employer.
Benefits of Spain’s Beckham Law for Expats
Beckham Law offers a plethora of benefits that make a move to Spain highly appealing. Following are some of the most prominent ones:
- A reduced flat tax rate of 24% on income up to €600,000, compared to the progressive rates of up to 54% for residents (in Valencia).
- Only income earned in Spain is taxed with untaxed worldwide income leading to significant savings.
- Wealth tax is restricted to Spanish assets only, excluding global wealth from the taxable base.
- Filing Modelo 720 – a declaration of overseas assets – is not mandatory, which simplifies tax compliance and offers more privacy.
- Benefits extend to the expat’s spouse and dependents, generating tax savings for the entire family.
Spain’s Beckham Law represents a substantial fiscal advantage. Initially introduced to attract premier talent and investment, it offers a significant reduction in Spanish taxable income for those who qualify. Whether you’re looking to move to Barcelona or Madrid, Gerson’s global mobility experts can help you with every step of your corporate relocation.
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