BackWhat is the Beckham Law?
The Beckham Law, whose technical name is “special tax regime applicable to workers, professionals, entrepreneurs and investors posted to Spanish territory” according to the Personal Income Tax Law, is a special regime that offers tax advantages to those who move their tax residence to Spain.
Features of the Beckham Law
Some key aspects of the Beckham Law are:
– Optionality and requirements: This regime is optional, but certain requirements must be met to apply for it.
– Application and approval: Interested parties must file an application with the Tax Agency, demonstrating that they meet the requirements. The Agency will review the documentation and decide whether to approve the application.
– Duration: If approved, the regime applies for 6 years, although it can be cancelled earlier.
– Tax advantages: It offers tax benefits to attract skilled workers, professionals, entrepreneurs and investors to Spain.
Requirements to apply the Beckham Law
To benefit from the Beckham Law, the following requirements must be met:
– Residency: Not having been a tax resident in Spain in the last 5 years.
– Work: There must be a new job that justifies the move to Spain.
– Income: Not obtaining income through a permanent establishment in Spain.
– Deadlines: Meet certain deadlines to relocate, start working and apply for the regime.
Main advantages of the Beckham Law
– Fixed tax rate of 24%: The general taxable income is taxed at a fixed rate of 24% up to 600,000 euros. The excess is taxed at 47%.
– Taxation of income obtained in Spain: Only income generated in Spain is taxed, with the exception of income from employment.
– Wealth Tax: Only assets located in Spain are taxed.
– No filing of Form 720: It is not necessary to file the declaration of assets abroad.
Main disadvantages of the Beckham Law
– Double taxation: Most of the double taxation treaties cannot be applied.
– Deduction of expenses: You do not have the tax benefits of the ordinary regime, such as the deduction of social security expenses.
– Exemption for severance pay: You are not entitled to the exemption of severance pay nor to the deduction for the minimum deduction of descendants or relatives.
Conclusions
The Beckham Law has interesting advantages and some disadvantages, so it is important to analyze each case to determine if it is convenient to use this regime. If the requirements are met and it is concluded that it is beneficial, the next step is to prepare and file the application with the Tax Agency, making sure to comply with all the requirements and deadlines.
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