What is Beckham's Law in Spain?

Overview

Beckham Law refers to a special reduced tax regime that benefits foreign workers in Spain. It aims to benefit non-residents with an IRPF (Impuesto de Renta Sobre las Personas Físicas) personal income tax of 24% instead of the progressive tax rate applicable to residents.  

Pros

• A flat rate of 24% for six years from the date of application. The law states that the broad taxable base which includes earned income, rents, etc. is taxed at a nearly flat rate of 24%, up to a maximum of EUR 600,000.00. Any excess from this amount is taxed at 47%, on the other hand, if the Beckham Law were not applied, the same general taxable income would be taxed at a progressive tax rate, a rate that can reach up to 50%.
• Only income from employment obtained in Spain is taxed. Under the everyday regime, all worldwide income would be subject to taxation in Spain.
• Wealth Tax is only levied on assets located in Spain. Wealth Tax is a tax levied on the net value of the taxpayer's worldwide wealth. With Beckham Law, only the net worth of assets located in Spain would be taxed.

Cons

• It will not be possible to deduct expenses or apply for exemptions. For example, severance pay is not exempt or reductions of the general regime.
• It may result in a higher tax burden abroad since double taxation treaties do not apply. 

Application Requirements

Individuals who apply for this tax regime must meet the following requirements: 

• Residence: The person applying should not have been a tax resident in Spain during the last ten years.
• Work: A new job must justify the move to Spain. There are different alternatives to meet this requirement, but there must be a job in Spain.
• Income: The person applying for the regime cannot obtain income through a permanent establishment in Spanish territory. This means that the applicant cannot have a self-employed activity (as a freelancer or freelance, for example).
• Timing: It is critical to comply with a series of deadlines:
  • To move to Spain.
  • To start the job
  • To apply for the regime

Application Process

The application must be submitted within 6 months from the time the person registers with Social Security as an employee of a Spanish company. It is necessary to fill up both Form 149 and Form 030 and send it to the Tax Agency, in addition to providing the following documents:

1. Employment contract with a Spanish company
2. The number of affiliated with Social Security
3. A copy of your passport
4. NIE (Número de Identificación de Extranjero) or Foreign Identify Number

Timeline for issuance of Beckham Act certificate

The tax administration has ten days from receipt of the request application; however, in practice, it usually takes 1-2 months. 

Reminder

Once the process is complete, each Spanish employee must share the resolution document with Oyster Support to be considered by Oyster Payroll. 

Official links and information: 

Form application explanation.
Official Website information.