Concept
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, exempts foreign-source income from personal income tax. 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.
Strategy advantages
Tax benefit
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.
No maintenance burden
The Beckham Law removes the obligation to file Form 720 (foreign asset declaration). Spanish CFC rules under Article 100 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:
- income received from sources outside Spain is not subject to Spanish income tax;
- 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 100 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
A Hong Kong company is registered for the client, where the client may control up to 100% of the shares.
It may be a family or consulting SPV, or an operating company. In either case, the client's incoming cash flows are consolidated at this company level.
Hong Kong profits tax does not apply to income sourced outside Hong Kong. Management from Hong Kong is standard practice and supports substance — what determines the tax treatment is the source of the income, not the location of management. 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.
If funds need to be distributed to the client, the Hong Kong company pays dividends quarterly or annually. Dividends paid from Hong Kong are exempt from Spanish income tax under the Beckham Law regime, provided the client 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 intended for individual clients — 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 be exempt from tax in Spain, the client:
- 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 client 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:
Structure setup costs
Cost tables are maintained in the underlying Notion source.
Structure maintenance costs
Cost tables are maintained in the underlying Notion source.
Key factual claims
- Spain: Beckham Law regime
- 26.41%: weighted average corporate income tax rate in OECD countries
- 0%: corporate income tax in Hong Kong
- 42.5%: average personal income tax rate in OECD countries
- 24% on Spanish employment income up to EUR 600,000; 47% on the excess; 0% on foreign-source income: effective personal income tax rate under the Beckham Law regime
- 100% - 42.5% = 57.5%: shareholder personal income tax
- 73.59% x 57.5% = 42.31%: remaining personal wealth
- When accumulating capital, an entrepreneur subject to average OECD rates would retain approximately 42% of pre-tax profit; the structure is designed to improve that ratio, subject to substance and source requirements.
This article is for informational purposes only and does not constitute legal, tax, or financial advice.