BackIn the case of the special regime for workers posted to Spain, or Beckham Law (article 93 of the Personal Income Tax Law – LIRPF), the Personal Income Tax liability is determined according to the rules established in the Non-Resident Income Tax (IRNR) for income obtained without a permanent establishment, with certain particularities, such as the non-application of article 14 of the IRNR. This article regulates the income exempt from IRNR and establishes that the income mentioned in article 7 of the LIRPF (including severance payments for dismissal or termination of the employee) is exempt, except for public aid to groups at risk of social exclusion received by individuals, as well as pensions for assistance to the elderly according to Royal Decree 728/1993.
Therefore, since article 14 of the IRNR does not apply to the regime for posted workers, the exemption does not apply to the severance payment (article 7.e of the LIRPF) paid to a worker under this regime, and taxes must be withheld on the amount paid.
In relation to the provisions of letter b), paragraph 2 of article 93 of the Personal Income Tax Law (LIRPF), income obtained during the application of the special regime will not be considered as income derived from an activity carried out before the date of moving to Spanish territory or after the date of communication established in paragraph 3 of article 119 of this Regulation. However, this income will be subject to taxation when it is considered to have been obtained in Spanish territory in accordance with the provisions of the revised text of the Non-Resident Income Tax Law. In this sense, withholdings are made in accordance with the rules established in the IRNR legislation, and the withholding percentage on earned income is 24%, or 47% in the event that the remunerations paid by the same payer of earned income during the calendar year exceed 600,000 euros.
Therefore, if a company has employees who have been taxed under the special Beckham Law regime in Spain in recent years, in the event that any of these workers are dismissed, the company must pay the corresponding severance pay as established by the applicable labor regulations.
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