Individuals who change their tax residence to Spain due to their move to the country have the option to pay taxes according to the special provisions of article 93, paragraph 2 of the Personal Income Tax Law 35/2006. Consequently, despite their tax residence in Spain, they will be subject to non-resident taxation according to the Non-Resident Income Tax (IRNR) regulations, better known as the Beckham Law.
Opting for this option could result in significant savings in tax terms, especially if the taxpayer receives considerable remuneration. Under this modality, the following Non-Resident Income Tax (IRNR) tax rates will apply instead of the general Personal Income Tax (IRPF) base rates:
– The first 600,000 euros will be subject to a flat tax of 24%, while the excess will be taxed at 47%.
– Income derived from the savings base will be taxed in the same manner as in the IRPF, starting at 19% and going up to 28%.
After highlighting the advantages of opting for this regime, it is necessary to mention that taxpayers under the Beckham Law cannot benefit from some tax advantages available to IRPF taxpayers. These include:
– Maternity/paternity benefits: although prior to the Supreme Court ruling 1462/2018 of October 3, these benefits were taxed in IRPF, the doctrine established by the ruling exempts them in IRPF, but not in IRNR.
– Bonus: if a taxpayer in this regime receives a bonus, he/she cannot apply the 30% reduction established in article 18 of the IRPF Law, which applies to extraordinary remuneration generated over a period of more than two years.
– Severance payments: Severance payments are exempt from personal income tax if they comply with the limits established in the Workers’ Statute. However, this exemption does not apply to taxpayers under this regime, which means that they must pay at least 24% tax on the compensation received.
– Others: tax deductions for having a large family or dependents of disabled persons are also not applicable at the family level for taxpayers under this regime.
Therefore, it is essential to carefully analyze whether, according to the circumstances and income of each individual, it is convenient to take advantage of the tax regime for impatriates. this analysis must take into account not only the requirements established by the regulations to benefit from this regime, but also the limitations in terms of tax benefits mentioned above.
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