BackOn December 7, 2023, Royal Decree 1008/2023, of December 5, 2023, which amends the Personal Income Tax Regulations, came into force. Among the main modifications, the adaptation of the “Beckham Law” application procedure stands out, for those new groups that want to apply to the regime as a result of the modifications of the Personal Income Tax Law in 2023.
Due to the delay of the corresponding regulatory development, it has become necessary for the Personal Income Tax Regulation to incorporate a transitory provision that regulates the situation of those taxpayers who have acquired tax residence in Spain in 2023 as a result of their displacement to Spanish territory in 2022 or in 2023.
Below, we will summarize the main amendments to the Personal Income Tax Regulation that affect the “Beckham Law”.
Changes in the Personal Income Tax Law in 2023 (affecting the “Beckham Law”):
The regime for impatriates or for individuals transferred to the Spanish territory (commonly known as the “Beckham Law”) is regulated under Article 93 of the Spanish Law 35/2006, of November 28, on Personal Income Tax and partial amendment of the Corporate Income Tax, Non-Resident Income Tax and Wealth Tax Laws (hereinafter, “PIT Law”).
This article was modified in fiscal year 2023, after the approval of the so-called “Startups Law”, expanding the profile of the persons who could benefit from this tax regime, and including digital nomads, administrators of a company (regardless of their percentage of participation in the company) or workers who carry out an entrepreneurial activity or who are highly qualified, as well as their spouses and children under 25 years of age.
However, even though the regulatory modification of the PIT Law came into force on January 1st, 2023, the Administration had yet to approve the necessary regulatory development so that the new groups could benefit from the “Beckham Law”.
Finally, on December 6, 2023, Royal Decree 1008/2023, of December 5, 2023, amending the Personal Income Tax Regulations, was published in the Official Gazette (hereinafter, “BOE”).
Summary of the regulatory changes (affecting the “Beckham Law”):
The regulatory development of the “Beckham Law” is included in Title VIII, Chapter I, of the Personal Income Tax regulation (articles 113 to 120).
As a result of the aforementioned publication of the Regulation in the BOE, these articles have been subject to several modifications, in order to adapt the application procedure of the regime in the case of the new cases introduced with the PIT Law modification. Among the main changes, we can highlight:
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Deadline for exercising the option for taxpayers who acquired tax residence in Spain in 2023.
Due to the delay in the corresponding regulatory development, it has become necessary for the new Personal Income Tax Regulation to include in its twentieth Transitional Provision a procedure that regulates the situation of those taxpayers who have moved to Spain in 2022 and 2023 (and have acquired their tax residence in Spain in the 2023 tax period):
“The deadline for exercising the option for the special regime provided for under article 93 of the Tax Law for taxpayers who acquire their tax residence in Spain in the tax period 2023, as a result of a displacement made to Spanish territory in 2022 or in 2023 before the entry into force of the Order by which the head of the Ministry of Finance and Public Function approves the model of communication of the option, will be six months from the date of entry into force of said Order, except when article 116 of these regulations grants a longer period.
In the event that the displacement referred to in the previous paragraph had been determined by the beginning of an employment relationship, ordinary or special, or statutory with an employer in Spain, by being ordered by his employer or when without being ordered, the work activity is provided remotely, or as a consequence of acquiring the status of director of an entity, they may also exercise the option for the aforementioned special regime prior to the date of entry into force of the Order indicated in the preceding paragraph, applying for this purpose article 119 of these regulations in its current wording as of December 31st, 2022.
However, in the case of workers who provide the remote services referred to in the preceding paragraph, they must send to the State Tax Administration Agency the documentation provided for in Article 119 of these regulations, within the term established in the first paragraph of this section.”
Consequently, digital nomads who acquire their tax residence in Spain in the fiscal year 2023 (as a result of their displacement to the Spanish territory in 2022 or 2023) will be able to exercise the option for the regime:
- Within six months from the date of entry into force of the corresponding Order approving the new model of communication of the option (which is still pending approval, but is expected to be published soon).
- It is also foreseen the possibility of exercising the option prior to the date of entry into force of the aforementioned Order. In the event of proceeding in this way, digital nomads have a period of six months (from the date of entry into force of the corresponding Order) to send the corresponding documentation to the State Tax Administration Agency.
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Documents to be attached together with the communication of the regime application.
Article 119 of the Personal Income Tax Regulation sets out the procedure for notifying the tax authorities of the option to apply the regime, as well as the supporting documentation to be provided for its accreditation.
Among the main changes made to this article, it is worth highlighting the documentation to be provided by the new groups that can take advantage of the “Beckham Law”.
Article 119.2 establishes that:
“the documentation supporting the registration with the Social Security in Spain or the documentation that allows the maintenance of the Social Security legislation of origin or, in the event that the registration with the Social Security is not compulsory, the document supporting the date of commencement of the activity, the corresponding residence authorization, if applicable, shall be attached”
However, additionally, it establishes that, depending on the applicant’s profile, certain additional documentation must also be attached. For example, in the case of digital nomads (Article 119.2.c):
“a supporting document issued by the employer expressing the recognition of the employment relationship with the taxpayer, the date of commencement of the activity as stated in the registration with the Social Security in Spain or in the documentation that allows, where appropriate, the maintenance of the Social Security legislation of origin, as well as the estimated duration of the provision of the labour activity in Spain”.
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Other relevant modifications.
In addition to the main changes mentioned above affecting Article 119 of the Personal Income Tax Regulation, or the implications of the twentieth transitional provision introduced, the new Regulation also includes, among other concepts, what will be understood by entrepreneurial activity (for the purposes of Article 93. 1.b).3º IRPF Law); what will be understood by highly qualified professional (for the purposes of article 93.1.b).4º IRPF Law); as well as the duration of the special regime or the causes for exclusion (joint or individual) affecting the family members of the main applicant.
Conclusion:
The “Beckham Law” expanded this year of 2023 the profile of the people who could benefit from this special tax regime, highlighting the inclusion of the group of digital nomads and family members for all the groups that can access the regime, as a result of the modification of the Personal Income Tax Law.
Recently, on December 7, 2023, the modification of the regulatory development came into force, which finally adapts the application procedure of the “Beckham Law” for those new collectives. Among the modifications implemented in the Personal Income Tax Regulation, it is worth highlighting the inclusion of a transitional period to apply for the regime for those taxpayers who have acquired their tax residence in Spain during the tax year 2023, having moved to Spanish territory in 2022 or 2023. It should also be noted that the documents required to prove inclusion in the regime remain unchanged, with the exception of the new groups, for which the new regulation details the specific documentation to be submitted in each case.
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