Before addressing the new changes and requirements that the Beckham Law will present in 2024, we will briefly review this regime.
The “Beckham Law” is the colloquial name given to a special tax regime in Spain designed for individuals who move to the country to work and, therefore, are considered non-resident taxpayers. Its official name is the “Tax Regime Applicable to Workers Relocated to Spanish Territory” or simply the “Impatriates Regime.”
This tax regime was established to attract foreign professionals and corporate executives to work in Spain. The law allows these foreign workers to enjoy certain tax benefits for a specified period.
Key features of the regime include taxation in Spain only on income generated in the country and a reduction in the taxation period for profits generated abroad.
The recent approval of Law 28/2022 aims to promote the development of emerging companies or startups, bringing about significant changes in the Beckham Law for 2024.
Flexibilization of Requirements and Expansion of Circumstances
The modifications presented by the Beckham Law in 2024, effective since December 22, not only ease some requirements but also expand the circumstances in which this special regime can be applied to employees relocated to Spain.
Reduction of Non-Residence Period
Previously, it was required that the relocated individual had not lived in Spain in the last 10 years. Law 28/2022 has reduced this period to 5 years. The condition has also been included that the relocation must occur in the first year of applying the regime or in the preceding year, following the guidelines of the Tax Agency to ensure a secure application.
Flexibility in the Application Areas of the Beckham Law in 2024
The modifications impact various application areas. Going forward, individuals who voluntarily move to Spain to work as employees exclusively through digital means, such as telecommuting, will be eligible to take advantage of the regime. For relocated corporate directors, the minimum participation requirement in the capital has been relaxed, applying only to those linked to asset-holding entities.
Expansion of Beneficiaries of the Beckham Law in 2024
One of the most significant changes coming to the Beckham Law in 2024 involves expanding the beneficiaries of the impatriates’ regime. In addition to the relocated worker or corporate director, the inclusion of the spouse and children under 25 years old (or with no age limit in case of disability) is now authorized, as long as they meet the general requirements of the regime.
Exemptions in Non-Resident Income Tax (IRNR)
The recent legislation also establishes exemptions for Non-Resident Income Tax (IRNR) taxpayers in certain fringe benefits, equating them to Personal Income Tax (IRPF) taxpayers. This measure ensures uniform and favorable treatment for all taxpayers, thus strengthening the attractiveness of the impatriates’ regime.
Transformation of the Dynamics of the Beckham Law in 2024
The alterations introduced by Law 28/2022 have transformed the dynamics of the Beckham Law in 2024, providing renewed flexibility and opening new opportunities for both relocated workers and their families. These changes not only streamline some requirements but also consolidate Spain’s position as an attractive destination for international professionals.
Advantages of opting for the Beckham Law in 2024:
The Beckham Law is a special tax regime for similar taxation to non-residents, offering lower tax rates and only taxing incomes generated in Spain.
- Lower Tax Rates: The flat rate of 24% is applied to the general taxable base up to 600,000 euros, with a rate of 47% for the excess
- Taxation Only on Incomes Generated in Spain: Only incomes generated in Spain are taxed, excluding work-related incomes.
- Wealth Taxation:In the Wealth Tax, taxation is applied only to assets located in Spain.
- Simplicity in Declarations:There is no obligation to submit the Model 720 for assets abroad under the Beckham Law.
Taxes with the Beckham Law in 2024:
Personal Income Tax
The conventional rates of personal income tax in Spain are quite high, ranging from 19% to 47%. For those who opt for the Beckham Law regime, a fixed tax rate of 24% will be applied for the first 6 years only on incomes generated in Spain.
– Flat rate of 24% for the first 600,000 euros of income.
– Incomes exceeding this amount will be taxed at 47%.
Capital gains will not be exempt either. Profits derived from dividends or the sale of assets, both movable and immovable, will be subject to a variable tax ranging from 19% to 26%, depending on the amount in question.
It is essential to note that capital gains obtained outside of Spain must be declared and taxed according to the tax regulations of the corresponding country.
Under this special regime for foreigners, the Wealth Tax will only apply to properties held in Spain. Therefore, a wealth tax on a portfolio of 3 million euros will amount to approximately 1.79%.
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