BackThe Beckham Law, also known as the special regime for displaced workers or Impatriates Law, constitutes a unique tax regime aimed at individuals displaced who enter the workforce in Spain.
Essentially, this legislation grants certain workers previously domiciled abroad the possibility of opting for a particular tax regime, more favorable than the general regime applied to other taxpayers.
Individuals employed in Spain are subject to the Personal Income Tax (IRPF), a progressive tax that taxes income according to percentage brackets, meaning that the higher the income, the higher the tax rate applied, and vice versa.
Under the Beckham Law in Spain, displaced workers can be taxed at a fixed tax rate, instead of the progressive IRPF. Specifically, those displaced who establish themselves in Spain and comply with their tax obligations can be taxed at a rate of 24%, as opposed to the range of IRPF, which ranges from 19% to 47%. In summary, the Beckham Law constitutes a particular modality of the IRPF.
It is worth noting that this legislation aims to attract qualified national and foreign workers to contribute financially in Spain, offering them a substantial reduction in their taxes by keeping them classified as non-residents.
The Beckham Law regime allows beneficiaries to be taxed at 24% on all their earnings up to a limit of 600,000 euros. Once this figure is exceeded, the tax rate of 47% is applied again, as it is for other taxpayers.
Furthermore, under the Beckham Law, workers are only required to declare Wealth Tax on assets located in Spain, instead of their global wealth as they would without this tax regime.
Regarding the duration, this special regime can be applied during the first six years of residence in the country, counted from the year of the change of residence and during the following five years. However, the renunciation of the Beckham Law or its termination after the maximum period of six years must be notified to the Tax Authority between the months of November and December of the previous year.
The requirements to qualify for the Beckham Law include not having resided in Spain during the previous five years, having an employment contract with a Spanish company, and in the case of receiving income from foreign companies, that these do not exceed 15% of the total annual income, among others. Additionally, since 2023, entrepreneurs with innovative activities can also benefit from this regime, provided they have a favorable report issued by ENISA prior to the displacement.
Finally, it should be noted that displaced foreign self-employed individuals who telework from Spain can benefit from the Beckham Law since 2023, provided they demonstrate that they carry out an entrepreneurial activity of interest to Spain.
Therefore, the Beckham Law constitutes a special tax regime aimed at displaced workers that offers significant advantages in terms of taxation, with the aim of encouraging the attraction of qualified national and foreign talent to Spain.
B Law & Tax International Tax & Legal Advisors.
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