B Law & Tax
24 January 2024

Tax Advisor: Beckham Law and new tax regulations for foreign workers in Spain

Beckham Law is implemented for newly arrived foreigners in Spain this year. Opting to be taxed under non-resident rules represents an opportunity for many relocated individuals. Royal Decree 1008/2023 significantly clarifies the procedures.

The Beckham Law allowed certain individuals who moved to Spain to be taxed as non-residents for a certain period. This option is attractive for high-income taxpayers, as it taxes the first €600,000 of general taxable base at 24% upon entering Spain.

The aim is to attract foreign talent and repatriate Spaniards abroad, and taxpayers choose between the special regime for relocated individuals and the general rules. In recent months, many have applied for this regime, but the Tax Agency has not yet provided definitive answers, awaiting the corresponding regulations.

 

Retroactive Application of the Beckham Law for Foreign Workers in Spain

The Ministry of Finance approved a Royal Decree at the end of 2023 that allows foreign workers who moved to Spain in 2022 or 2023 to benefit retroactively from the Beckham Law.

This special tax regime, designed for highly qualified foreign residents or workers in startups, addresses a legal gap created by the lack of regulations after the law was approved in December 2022.

The Royal Decree establishes a six-month period from the publication of the order for the application form for foreign workers to apply the Beckham Law. This law allows taxation at 24% on income up to €600,000, taxing higher incomes at 47%. The approval of the Royal Decree provides tax certainty for foreign workers and makes their stay in Spain more attractive.

 

Startup Law 

Over time, the special regime for relocated individuals has undergone changes, with a significant one introduced by the startup law:

The key requirement of this regime is not to have been a tax resident in Spain for a specific period before the relocation, and the startup law reduced this period from ten to five years.

The regulation stipulates that the commonly known Beckham Law can apply to salaried employees with an international telecommuting visa.

Under certain conditions, both the spouse and children under 25 or disabled can opt for this regime, and this option has been extended to the parents of the children, even if they are not married.

Participation in entrepreneurial activities and the development of highly qualified professionals were added as reasons for relocation.

Several important tax aspects of the startup law awaited regulation, which has been specified in Royal Decree 1008/2023.

Key points addressed in the Startup Law include the computation of deadlines and conditions for choosing the regime, the classification of an activity as entrepreneurial, the verification of the high qualification of a professional, terms for calculating tax debt according to non-resident tax regulations, determination of withholdings, and conditions for certain individuals linked to the relocated person to apply the regime.

 

Foreign workers relocated in 2022 and 2023 

Royal Decree 1008/2023 establishes specific deadlines for opting for the Beckham Law:

  1. In general terms, there is a six-month period from the entry into force of the order approving the form to communicate the choice of the regime.

  2. In cases of relocations in 2023, after the entry into force of the order of the form, the deadline is six months from the start of the activity according to registration with Social Security.

  3. If the start date of the activity is determined by other documentation and registration with Social Security is not mandatory, the date of the document justifying the start of the activity is taken as a reference.

In all cases, the longer deadline provided by general regulation will apply. For most work relocations, the choice can be made before the entry into force of the order approving the form, using the procedures in effect until December 31, 2022.

Workers providing remote services must submit the choice and additional required documentation within six months from the order, or a longer period according to general regulations.

 

 

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