The Beckham Law is a special tax regime in Spain that allows certain foreign workers who move to the country to pay a reduced rate of personal income tax (IRPF) for a limited period of time. It was introduced in 2005 and is popularly known as the "Beckham Law" because one of the first famous beneficiaries was footballer David Beckham when he signed for Real Madrid.
What is the purpose of the Beckham Law?
The aim of the Beckham Law is to attract foreign talent to Spain, allowing qualified workers from other countries to enjoy a lower tax burden when moving to work in the country. This seeks to make Spain more attractive for senior executives, managers, professional athletes and other qualified professionals who consider Spain as a work destination.
Who can benefit from the Beckham Law?
To qualify for the Beckham Law, the beneficiary must meet certain key requirements:
- Be a worker posted to Spain . This means that the individual must have been hired by a Spanish company or transferred by an international company to Spain.
- Not having resided in Spain in the 5 years prior to the move. This point is crucial, as it prevents those who have recently lived in Spain from taking advantage of this tax regime. (This period of five tax periods was introduced by Law 28/2022, of December 21 , known as the " Startups Law ", with effect from January 1, 2023; previously it was 10).
- Engage in a work activity in Spain , either as an employee in a company or as a professional athlete.
- The employment cannot be in a related company , that is, you cannot benefit from the scheme if you already have a previous employment relationship with the Spanish company before the transfer.
How are Beckham Law beneficiaries taxed?
Under this regime, the displaced worker is taxed in a similar way to non-residents. The main advantage is that:
- They are taxed at a fixed rate of 24% on income earned in Spain, up to a limit of €600,000 per year.
- If income exceeds €600,000, the applicable tax rate becomes 47% for amounts above this threshold.
- They do not pay taxes on income earned outside of Spain . Under the Beckham Law, only income generated in Spain is taxed, which is advantageous for people who have income from multiple countries.
What additional tax benefits does the Beckham Law offer?
- Limited taxation on worldwide income . Beneficiaries are only taxed on income obtained in Spain, which allows them not to declare other international income, such as investments or properties abroad.
- Exemption of certain income . Dividends, interest and capital gains generated outside Spain are generally not subject to tax in the country under the Beckham Law.
- Flat rate . Unlike the general income tax system, where the tax rate increases progressively according to income, Beckham Law beneficiaries enjoy a flat rate of 24%, which can be considerably lower compared to the general marginal income tax rate, which reaches 47% for high-income residents.
How long can the Beckham Law be applied?
The Beckham Law regime can be applied for a maximum period of 6 years . This period includes the year in which the employee moves to Spain and the following 5 tax years.
What happens once the 6-year period under the Beckham Law ends?
Once the 6-year period has ended, the worker starts paying taxes as a normal tax resident in Spain. This means:
- Taxation on worldwide income . That is, the individual must pay taxes not only on income obtained in Spain, but also on any income generated abroad.
- Application of progressive tax rates . Income will be taxed according to the progressive income tax scale, which in 2024 ranges from 19% to a maximum of 47%, depending on the amount of annual income.
How do you apply for the Beckham Law regime?
The process for applying for Beckham Law status is relatively simple, but requires careful analysis to ensure compliance with the requirements. The general procedure includes:
- Submit an application to the Spanish Tax Agency (AEAT) within the first 6 months from the date of commencement of work activity in Spain.
What documents do I need?
- Employment contract : Copy of the contract certifying that you have moved to work for a Spanish company or that you have been transferred to Spain.
- Registration in Spanish Social Security, also called “Alta”
- Current employment verification letter
- Previous tax residency certificate : To prove that you have not been a tax resident in Spain for the previous five years. This may be a tax residency certificate issued by the tax authorities of the country where you resided.
- NIE : Foreigner Identification Number (NIE), which is necessary for any tax procedure in Spain.
How to apply?
Once you have completed Form 149, you must submit your application to the Tax Agency (AEAT) . You can do this in two ways:
a) Telematic submission:
- AEAT Electronic Office : If you have a digital certificate or the Cl@ve PIN identification system , you can submit the application online. This is quick and allows online tracking of your application.
- Direct access to Form 149 can be made from the Electronic Office.
- We leave a tutorial on how to do it, if you decide to apply it yourself.
b) In-person presentation:
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You can submit the form in paper form at a Tax Agency office. You must make an appointment and bring the printed documents.
We recommend having a tax advisor for this process to avoid errors.
How long will it take to receive a resolution?
Once the application has been submitted, the Tax Agency will review your case and notify you if you have been accepted into the special Beckham Law regime. The response may take several weeks from the administration.
How do I file my annual income tax return?
Every year, while you are covered by the Beckham Law, you must file your income tax return using Form 151, which is specific to this tax regime. This is done in a similar way to the general income tax return, but with a different form. More information here.
What are the limitations of the Beckham Law?
- It does not apply to all posted workers . Although the scheme was designed to attract talent, there are limitations on what types of workers and under what circumstances can benefit from the scheme. Not all posted workers qualify.
- Income threshold . The 24% rate only applies to the first €600,000 of annual income. If this income is exceeded, the tax rate increases to 47% for the portion exceeding this threshold.
- It is not possible to change your work activity . If the beneficiary changes his/her job or company during the 6 years of the scheme, he/she may lose the right to continue benefiting from the Beckham Law.
What happens if I don't meet the requirements of the Beckham Law?
If the requirements are not met, the worker will be treated as a tax resident in Spain from day one and will be taxed according to the general rules of personal income tax, which could mean a significantly higher tax burden.
Can the Beckham Law be waived?
The process of resignation is not formally established explicitly in the law, but it can be carried out in the following ways:
- Not applying for the regime : The simplest way to "opt out" is not to apply for the special regime in the first 6 months from the start of working in Spain. If the application is not made within this period, the worker will automatically be considered a tax resident under the general IRPF regime.
- Submit a formal request to waive : If you have already benefited from the Beckham Law but decide to waive it later, you can submit a formal request to the Tax Agency (AEAT) indicating that you wish to stop applying this special regime. However, once you have waived it, you cannot benefit from it again during the same period of stay in Spain. the waiver , taxpayers who have opted for the special regime may waive its application during the months of November and December prior to the start of the calendar year in which the waiver must take effect , through the communication model
- Changing your employment status : If you change jobs or lose the job for which you joined the scheme, you could lose the right to continue under the Beckham Law. In this case, you would be indirectly leaving the scheme.
What are the consequences of waiving the Beckham Law?
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Taxation as a Spanish tax resident : By renouncing the Beckham Law, the worker will be taxed as a common tax resident in Spain. This means:
- You will have to pay taxes on your worldwide income , that is, all the income you obtain, whether in Spain or abroad, will be subject to taxes in Spain.
- Progressive personal income tax rates will apply , ranging from 19% to 47% , instead of the fixed rate of 24% offered by the Beckham Law.
- There is no retroactivity : The waiver takes effect from the moment it is notified or the conditions are no longer met, but it does not affect previous tax years where the regime has already been applied. Tax benefits applied in previous years are not lost.
- Inability to apply again : Once you waive or cease to meet the requirements of the Beckham Law regime, you cannot apply for this benefit again during the same period of stay in Spain. You will only be able to apply again if you leave Spain and, after meeting the requirements again (such as not having resided in the country in the last 5 years), return.
Official regulatory reference of the Beckham Law:
1. Law 35/2006, of November 28, on Personal Income Tax
- Article 93 : Special tax regime applicable to workers posted to Spanish territory.
This establishes that workers who move to Spain can choose to pay taxes as non-residents (at a flat rate of 24%) for a maximum of six years, provided they meet certain requirements.
2. Royal Decree 439/2007, of March 30, approving the Regulations of the Personal Income Tax
- Chapter XI : This chapter regulates the details of the tax regime for displaced workers, in accordance with article 93 of Law 35/2006.
3. Reform of 2015 (Law 26/2014)
Law 26/2014 , of 27 November, introduced some modifications to the special regime. Among the changes, it limited the application of this regime to professional athletes, which excluded most of them (such as football players) from taking advantage of this benefit. However, the regime remains in force for other types of workers who travel to Spain.
Article 93 of Law 35/2006 - Summary of content
Article 93 establishes that individuals who acquire tax residency in Spain as a result of their relocation may choose to pay taxes as non-residents for a period of up to 6 years . The main characteristics are:
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Requirements :
- Not having been a tax resident in Spain in the last 5 years .
- Being hired by a company in Spain or seconded by a foreign company to work in Spanish territory.
- Not earning income through a permanent establishment in Spain (i.e. not being self-employed).
- Taxation :
- Income from work earned in Spain will be taxed at a flat rate of 24% up to a maximum of €600,000 per year . Above this figure, a rate of 47% will apply .
- Income obtained outside of Spain is not included in the tax base.
- Duration :
- The regime can be applied during the year in which tax residency in Spain is acquired and during the following 6 years .
- Exclusion for professional athletes :
- Following the 2015 reform, professional athletes are no longer eligible for this special tax regime.
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