The Beckham Law refers to a tax tool aimed at individuals who move their tax residence to Spanish soil due to engaging in labor activity.
This system offers the opportunity to enjoy more advantageous taxation, allowing taxpayers to apply the regulations of the Non-Resident Income Tax (IRNR), even if they meet the requirements to be considered taxpayers of the Personal Income Tax (IRPF). This dual tax option leads to significant tax savings compared to the general tax regime, promoting the attraction of talent and highly skilled professionals from other countries to Spain.
One of the main advantages of this system lies in the fixed tax rate of 24% for the general taxable base up to 600,000 euros; beyond this point, the tax rate increases to 47%. This represents a significant difference compared to the standard regime, which imposes a progressive tax rate based on income levels, ranging from 19% to 49%. Additionally, taxpayers are only required to pay taxes in Spain on income generated within the country, except for salaries, which are subject to taxes in their entirety regardless of where they are earned, resulting in a significant reduction compared to the general regime.
Another important tax benefit is the absence of the obligation to file Form 720 for assets located abroad, as well as the option to only pay the Wealth Tax in relation to properties owned in Spain. Starting in 2023, this special tax option can also be extended to the spouse and minor children of the taxpayer who relocate with them.
This regime, although optional, is subject to meeting certain requirements for its application. It is essential that the applicant has not had their tax residence in Spain for at least the five years prior to their relocation, which can be carried out either during the first year of the application of this law or during the immediately preceding year, due to the signing of an employment contract, taking on a position as an administrator in a company, or starting a business activity in Spain, among other circumstances.
Furthermore, the Beckham Law can be applied during the tax year in which the taxpayer changes their tax residence to Spanish territory, as well as during the following five tax years.
The primary objective of this law is twofold:
- Strengthen the Spanish tax system in response to intense tax competition from other countries.
- Promote the arrival of highly skilled professionals to Spain, thereby contributing to the increased competitiveness of Spanish companies.
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