Concept
The strategy combines personal tax residence in Spain under the Beckham Law with a Hong Kong company holding offshore income. Spanish-source employment income is taxed at a flat 24% rate up to €600,000 and at 47% above that; foreign-source passive income — including dividends from the Hong Kong company — falls outside the Spanish tax base. The structure operates at two levels: personal residence and corporate source.
The structure applies the source principle at both levels. Hong Kong exempts income sourced outside its territory from profits tax. Spain, under the Beckham Law, keeps foreign-source passive income outside the personal income tax base. Offshore income accumulated in the Hong Kong company and distributed as dividends to the Spanish resident is not subject to tax in either jurisdiction — provided the substance and source conditions are met.
Comparable territorial regimes for individuals include the UK non-domicile regime (substantially reformed from April 2025), Switzerland Forfait, Italy's flat-tax regime for new residents, Ireland's SARP, and Portugal's former NHR. The Beckham Law differs in that it taxes Spanish-source employment income at a flat 24%, rather than exempting it entirely.
Tax mechanics
Rate comparison
Standard tax resident (OECD average)
Corporate tax — 26.41%
Personal income tax — 42.5%
Retained from pre-tax profit — ~42%
Beckham Law + Hong Kong
Corporate tax — 0% on offshore income (Hong Kong profits tax exemption; requires offshore claim filed with the IRD)
Personal tax on Spanish employment income — 24% up to €600,000; 47% above
Personal tax on foreign income (dividends, interest, capital gains outside Spain) — 0%
Retained from pre-tax profit — materially higher, depending on income mix
The comparison uses OECD averages as a reference point. The actual benefit depends on the income structure, the ratio of Spanish-source to foreign-source income, and whether the offshore claim is sustained.
Ongoing obligations
A Hong Kong company does not carry a Spanish corporate tax burden if it qualifies for the offshore profits exemption. However, proper accounting records are required under the Companies Ordinance (Cap. 622), and an offshore claim must be filed with the Inland Revenue Department to establish the 0% rate on qualifying income — it is not automatic.
The Beckham Law removes the obligation to file Form 720 (foreign asset declaration). Spanish CFC rules under Article 91 LIRPF may still apply in specific fact patterns and should be assessed individually.
Strategy description
Spain residence
The Beckham Law (formally the Régimen Especial para Trabajadores Desplazados, RETD) was substantially reformed by Ley 28/2022, effective from the 2023 tax year. Prior to 2023, the regime applied only to employees relocating under a Spanish employment contract. The reform extended eligibility to: remote workers holding Spain's Digital Nomad Visa; entrepreneurs starting a qualifying business activity in Spain; and highly qualified professionals and certain investors.
Key tax conditions:
- foreign-source passive income — dividends, interest and capital gains arising outside Spain — falls outside the Spanish tax base;
- Spanish-source employment income is taxed at a flat 24% up to EUR 600,000; the excess is taxed at 47%;
- wealth tax applies only to assets located in Spain;
- Form 720 (foreign asset declaration) is not required under the regime;
- Spanish CFC rules under Article 91 LIRPF may nonetheless apply where the taxpayer holds a controlling interest in a low-taxed foreign entity — this should be assessed individually;
- the regime applies for the year of arrival plus five subsequent tax years (six years in total).
Hong Kong company
The corporate side is a Hong Kong private limited company in which the individual may hold up to 100% of the shares.
It may be a family or consulting SPV, or an operating company. In either case, incoming cash flows are consolidated at this level.
Hong Kong profits tax does not apply to income sourced outside Hong Kong. Two questions have to be kept apart here. Source — where the profit-generating activity actually takes place — governs the Hong Kong treatment, and it is not decided by where the company is managed. Place of management governs the Spanish side: management exercised from Spain can make the company Spanish tax-resident or create a permanent establishment there, and an offshore source does not cure that. Management from Hong Kong is therefore not what earns the offshore exemption; it is what keeps the Spanish exposure closed. The offshore claim must be filed and substantiated: the IRD may request evidence of income source, contracts, and decision-making flow.
Where the Hong Kong company has a genuine business purpose, expenses with a clear business connection may be deductible in computing the profits tax base. Personal expenses that lack a documented business rationale are not deductible; the characterisation of each expense category should be reviewed with a Hong Kong tax adviser.
Where funds are distributed upward, the Hong Kong company pays dividends quarterly or annually. Dividends paid from Hong Kong fall outside the Spanish income tax base under the Beckham Law regime, provided the shareholder does not create a permanent establishment or act as a dependent agent in Spain. CRS reporting through the Hong Kong bank applies regardless of the Spanish tax treatment.
Tax risks and mitigation
Scope. The structure is built around individuals — founders, entrepreneurs, investors, and remote professionals. It is not a group tax planning vehicle. Groups with consolidated annual revenue above EUR 750 million fall within OECD Pillar Two (15% global minimum tax), which applies at the group level regardless of where individual entities are located.
Spanish-source income. Under the Beckham Law regime, income is exempt from tax only if it is not received in Spanish territory. If the Hong Kong company is managed from Spain and/or receives income in Spain, it may be treated as a Spanish tax resident and required to pay corporate taxes.
For dividends to stay outside the Spanish tax base, the shareholder:
- must not be a dependent agent of the Hong Kong company;
- must not create a permanent establishment of the Hong Kong company in Spain.
Dependent agent means a person authorized to conclude contracts on behalf of the company and who regularly concludes them. Under the modern OECD approach, dependent agents also include persons who negotiate the terms of agreements on behalf of the company.
Permanent establishment means a place from which an enterprise conducts its business, meaning it has employees and an office. A home office of employees working remotely may also constitute a permanent establishment.
To reduce PE and dependent-agent risk, the Hong Kong company should have a director with genuine authority to negotiate and sign contracts — typically a local Hong Kong director or a licensed management company. The shareholder may remain on the board for oversight, but should not be the person who negotiates or executes agreements on behalf of the company.
Substance in Hong Kong is required for two independent reasons: to support the offshore profits claim with the IRD, and to avoid a PE finding in Spain. A nominee director without genuine authority satisfies neither. The minimum substance baseline:
- director with real authority, demonstrably acting from Hong Kong;
- registered office and functioning bank account in Hong Kong;
- contracts negotiated and executed in Hong Kong;
- board minutes documenting decisions made in Hong Kong;
- financial statements and profits tax returns filed on time;
- offshore claim filed with the IRD and supported by source-of-income evidence.