BackWith the aim of attracting new talent to the country, modifications were made to Law 28/2022, of December 21, on the promotion of the startup ecosystem, better known as the “Startups Law”, which has brought significant changes to the regulation of the special regime for Personal Income Tax (IRPF). These modifications came into effect on January 1, 2023.
To better understand these novelties, it is important to recall the advantages of the special IRPF regime, also known as the “Beckham Law”:
Taxation for income obtained in Spain: Taxpayers under this regime only pay taxes in Spain for income considered obtained in the country, according to the Non-Resident Income Tax Law (IRNR), which means they are not obliged to pay taxes in Spain for their worldwide income.
Fixed taxation rate: Taxpayers pay tax on income subject to taxation derived from their activity at the general fixed rate of 24%, up to 600,000 euros of total income, and beyond that amount, at 47%. This is especially beneficial for those with high incomes, as they avoid paying taxes according to the progressive scale of IRPF, which in some cases could exceed 50%, depending on the autonomous community of residence.
Taxation in Wealth Tax and Temporary Solidarity Tax on Large Fortunes: Taxpayers under this regime pay these taxes only for assets located in Spain, as opposed to tax residents in Spain, who pay taxes on their worldwide wealth.
Exemption from filing the annual declaration of assets abroad (model 720), eliminating this formal obligation.
The requirements to opt for this special regime include:
• Not having been a tax resident in Spain during the 5 tax periods prior to moving to Spanish territory. Before the entry into force of the law, this period was 10 years.
• Not obtaining income qualified as obtained through a permanent establishment in Spain.
• Moving to Spanish territory in the first year of application of the regime or in the previous year, due to an employment contract or, from 2023 onwards, as a foreign teleworker or digital nomad, provided they have the visa for international teleworking provided for in Law 14/2013, on support for entrepreneurs and their internationalization.
The Startups Law introduces several significant novelties in the special regime of Personal Income Tax (IRPF), which allows attracting foreign talent and promoting economic activity in Spain. These novelties expand the scope of the special regime and provide opportunities to a wider variety of individuals, including administrators, entrepreneurs, highly qualified professionals, and dependents of taxpayers. Below is a summary of the main novelties:
Administrators: The special regime can be applied to administrators of an entity, regardless of the percentage of ownership in it. Previously, there was a limitation restricting this option to administrators with a participation not exceeding 25% in the share capital, but from 2023 onwards, this restriction applies only to administrators of asset-holding companies.
Entrepreneurs: The law allows opting for the special regime for entrepreneurs who carry out an economic activity qualified as entrepreneurial, according to the procedure described in the Law on support for entrepreneurs and their internationalization.
Highly qualified professionals: The possibility of applying the special regime to highly qualified professionals who carry out economic activities in Spain is introduced, provide services to startups, or engage in training, research, development, and innovation activities, provided that their income represents more than 40% of the total of their income.
Dependents of the applicant: The law also allows minor children under 25 years of age or with disabilities, as well as the taxpayer’s spouse, to opt for the special regime, provided they meet certain requirements, such as moving together with the taxpayer to Spain, acquiring tax residence in the country, and not having been tax residents in Spain during the last five fiscal years. It is important to note that the sum of the taxable bases of the dependents must be lower than that of the main applicant, both at the time of application and in all years of application of the regime.
In summary, these modifications make the special IRPF regime even more attractive and accessible to a variety of individuals, which can be beneficial for those with high assets or incomes. However, due to the complexity of the matter, it is essential to seek advice from experts in the field to fully understand the requirements and formalities necessary to apply this special regime.
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