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.
- 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.
- 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.
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
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:
- Employment contract with a Spanish company
- The number of affiliated with Social Security
- A copy of your passport
- 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.
Once the process is complete, each Spanish employee must share the resolution document with Oyster Support to be considered by Oyster Payroll.