🇪🇸Beckham Law: Spain's special tax regime

Lawyer, Family Office

Concept

The Beckham Law (Special Tax Regime, Beckham Law) — a Spanish tax regime granting foreign tax residents a fixed rate of24% on employment incomeup to €600,000 per year and0% on passive income from sources outside Spainfor 6 tax periods. Governed by Article 93 of the Personal Income Tax Law (LIRPF) as last amended by Startups Law 28/2022, effective January 1, 2023. Application is filed using form Modelo 149 with the Agencia Tributaria within 6 months from the date of obtaining NIE or commencing Spanish employment activity.

Key difference from standard Spanish tax residency: dividends, interest, capital gains and rental income from assets outside Spain are NOT subject to Spanish income tax. Modelo 720 (declaration of foreign assets) must be filed, but penalties are limited by CJEU decision C-788/19 of January 27, 2022 to standard fines under the Spanish tax code.

The regime was introduced in 2004 by Real Decreto 687/2005 to attract professional athletes and executives of international companies — David Beckham became the first high-profile user, hence the name. The Startups Law 28/2022 reform extended the regime to self-employed (autónomos), researchers, executives of entrepreneurial companies and holders of the Spanish Digital Nomad Visa (D8).

Benefits

Tax rate on foreign passive income:

• 0% on dividends, interest on loans, royalties and income from sale of shares (regardless of amount).

Tax rate on employment income:

• 24% up to €600,000 per year;
• 47% above €600,000.

Socialcontributions:

• for 2024 minimum €230, maximum €542;
• for 2025 minimum €200, maximum €590.

Social contribution amounts are calculated based on the taxpayer's age, type of activity and income level.

In Spain the maximum social contribution is €14,000 per year. Social contributions may be paid in the employer's country (e.g. in Russia).

Disadvantages

• no tax deductions available
• double tax treaties do not apply (withholding tax may arise at source)

Conditions

To apply the Beckham Law one must have one of the following statuses:

However:

The Beckham Lawcannotbe used by persons who held Spanish tax residency during the preceding5years.

Alsocannotclaim the special regime those who receive income from a permanent establishment located in Spain.

Reasons for rejection

1. Failure to meet the 5-year non-residency condition;
2. Not belonging to a group to which the regime may apply;
3. Failure to meet the filing deadline (6 months).

For persons who obtained Spanish tax residency in 2023, a transitional period applies whereby the deadline runs from the date the new tax form for filing the application became available, i.e. from 15/12/2023.

For spouses and/or children the deadline runs from the moment of arrival in Spain.

Switching to the Beckham Law

To begin using the Beckham Law, one must initially completeForm 030to register as a tax resident and obtain a tax ID (NIE). Then notify the Spanish tax agency of the intention to apply the special tax regime by completing an application on Form 149.

The following documents must also be included with the form:

• Passport and tax ID
• Social security number
• Employment contract (this document does not require specification of a work address in Spain (centro de trabajo), unlike the document for workers sent on secondment).

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