BackThe Special Tax Regime for workers, professionals, entrepreneurs, and investors relocated to Spanish territory, commonly known as the “Beckham Law”, is aimed at workers, both Spanish and foreign, who move to Spain for work purposes or to telework from Spain. According to this regulation, relocated workers who meet certain requirements have the option to choose to be taxed only on income generated within Spanish territory, as opposed to their total worldwide income, at a fixed tax rate of 24%, in general.
Requirements to Benefit from the Beckham Law:
The fundamental criteria to benefit from the provisions of the Beckham Law are as follows:
Beneficiaries: This provision is aimed at workers who move to Spain for work reasons and who have not been tax residents during the five tax periods prior to the relocation.
This relocation must take place within the first year of application of the regime or during the previous year, motivated by:
Employment contract signed with a Spanish company or with a foreign company with which a relocation letter has been signed.
Remote work for a foreign company, in the case of digital nomads, who have an employment contract that allows remote work through telematic means.
Appointment as an administrator of an entity, with the exception that, if it is a patrimonial entity, the administrator does not own a stake equal to or greater than 25%.
Carrying out an economic activity in Spain as self-employed, which must be classified as entrepreneurial.
Performance of an activity by a highly qualified professional providing services to start-ups or conducting training or R&D activities, provided that the latter represent more than 40% of their income.
Family Members: In addition to foreign workers, this regime also applies to certain members of their family environment, such as spouses and children under 25 years of age (or any age in case of disability). The taxable base of the family member must be lower, in all the years of application of the Beckham Law, than that of the main taxpayer.
Reduced Taxable Base and Tax Rate: Beneficiaries have the option to be taxed only on income generated in Spain, reducing their taxable base. The applicable tax rate to this taxable base is fixed: 24% for income up to 600,000 euros and 47% for income exceeding this amount.
Duration of the Regime: The option to avail of this Special Regime can be exercised during the first six months from the start of the employment relationship, as well as retroactively for those who moved to Spain in the years 2022 or 2023. Once the worker is in Spanish territory, the Regime applies during the fiscal year of arrival and for the following five years.
Exceptions to the Regime:
There are certain conditions that exclude the application of the Beckham Law. Among the cases in which this regime cannot be chosen are:
Self-employed workers, unless they carry out an economic activity qualified as innovative or are highly qualified.
Professional athletes.
Tax Advantages and Disadvantages of the Beckham Law:
Among the most notable tax advantages of this regime are:
As mentioned earlier, exclusive taxation on income generated in Spanish territory at a reduced tax rate of 24%, in general, as opposed to generally higher taxation under the ordinary tax regime.
Exemption from taxes on capital gains obtained abroad.
Taxation of the Wealth Tax only on assets and rights located in Spain, that is, by real obligation.
Exemption from filing Form 720 for informative declaration of assets abroad.
Taxation of Inheritance and Gift Tax according to the regulations of the corresponding autonomous community, regardless of the origin of the received assets.
However, this Regime also presents certain disadvantages, such as the impossibility of applying double taxation agreements by workers relocated to Spain who opt for this Regime, as well as the restriction on the deduction of expenses that applies to other taxpayers under the ordinary tax regime.
B Law & Tax International Tax & Legal Advisors.
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