B Law & Tax
11 December 2023

Tax advisor: Fiscal resolution for foreign workers: Startup Law and Beckham Law in Spain

In a last-minute decision, the Ministry of Finance resolves the uncertainty affecting foreign workers who moved to Spain in 2022 or 2023 to undertake activities or perform highly qualified functions, as established in the Startup Law of December 2022. These workers had the option to benefit from the special tax regime for expatriates, known as the Beckham Law; however, the lack of regulatory development by the Administration hindered the application of this taxation.

Now, as published in the Official State Gazette (BOE) this Wednesday, the Ministry of Finance has approved a Royal Decree to regularize the situation of these workers, allowing them to opt for the Beckham Law retroactively. According to the text, “individuals who establish their tax residence in Spain in the fiscal year 2023 as a result of having moved to Spanish territory in 2022 or 2023” will have a period of six months to choose this regime once the Order establishing the model for its application is approved, still pending publication.

 

Startup Law: Legal Solution for Talent Attraction in Spain

The Startup Law, also known as legislation for emerging companies, expanded the scope of the Beckham Law to make the arrival in Spain more fiscally attractive, aiming to attract talent. This regulation allowed individuals who moved to the country to undertake activities, highly qualified professionals in startups, training activities, research, development, or innovation, as well as business executives or digital nomads, to benefit from this regime. However, profiles that relocated to Spain in the current year and wished to benefit from the Beckham Law could not do so due to the lack of regulatory development. The Ministry of Finance resolves this legal gap by issuing a Royal Decree, stating that, provided the taxpayer has provided the required information, the Administration will issue a supporting document within a maximum period of ten business days, confirming that the taxpayer has chosen to apply this special regime.

Fiscal Updates 2023: Changes in Declarations, Autonomous Obligations, and Artistic Withholdings

The Royal Decree addresses various novelties from the General State Budget Law for 2023 in Spain. The income threshold for mandatory personal income tax (IRPF) declaration is raised from 14,000 to 15,000 euros for taxpayers with more than one payer. The obligation to declare is also established for individuals who have been self-employed at any time during the fiscal period. Additionally, the withholding tax on income derived from artistic creation is modified, set at 7% if it does not exceed 15,000 euros and constitutes more than 75% of total income; otherwise, it will be 15%.

 

In summary

The Spanish Ministry of Finance has resolved the tax uncertainty for foreign workers who moved to the country in 2022 or 2023 to undertake qualified activities or functions, according to the Startup Law of December 2022. The lack of regulatory development hindered the application of the special tax regime known as the Beckham Law. The new Royal Decree, published in the Official State Gazette, allows these workers to benefit from the Beckham Law retroactively. Additionally, it addresses fiscal changes for the year 2023, such as the increase in the income threshold for IRPF declaration and modifications in withholdings on artistic income.

 

 

 

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