If you are a foreigner and have decided to come to Spain for work reasons, you should know that there are certain tax obligations that you must comply with in the country. But, have you heard of the Beckham Law? This regulation can benefit you, and below we will tell you about the benefits it offers.
What is the Beckham Law?
The Beckham Law, also known as the law of the impatriates, consists of a special tax regime that allows foreigners who come to live in Spain to pay a flat tax rate of 24% of the income obtained, instead of a progressive tax that goes from 19% to 45%.
In this way, you will be able to save significant amounts of money, since, even if you spend more than 300,000 euros a year, you will not be taxed at 45% IRPF, but at 24%.
Likewise, it will allow workers residing abroad who want to work in Spanish territory to cancel their property and income taxes as if they were non-residents.
The regulation is regulated in section 93 of the Spanish Income Tax Law (2004), and allows attracting talent and qualified employees to Spain, being applied during the first 6 years of residence.
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Who can apply for the Beckham Law?
Now you have the doubt, can I use this regulation in my favor? Below, we will tell you in which cases foreigners can take advantage of this law:
Foreign workers who have just moved to Spain.
Administrators who move to Spain to work in a company.
Expatriates with high incomes and who hold a management position in a company.
On the other hand, those foreigners who are in the following cases will not be able to benefit from this law:
Self-employed workers (freelancers)
Professional sports athletes
The Beckham Law was created to encourage the hiring of management personnel in Spain in 2004, and owes its popular name to David Beckham, who was one of the first to benefit from this law.
However, over the years several modifications were made to the tax regulations for sports professionals specifically, generating a special regulation for professional athletes, provided for in Royal Decree 1006/1985.
For this reason, professional athletes cannot resort to the Beckham Law. A controversial move that has brought a lot of opinions and analysis on taxation in sport.
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How to apply for the Beckham Law?
Not having been a resident during the 10 years immediately preceding the date of application.
The reason for moving to Spain must be an employment contract ordered by a Spanish company. Exceptions are made for sportsmen, since they have their own regulations.
In the case of also having income from a job abroad, it cannot exceed 15% of the total income.
In the case of those foreigners who come to work as administrators in Spain, they cannot own more than 24% of the company.
Steps to apply
In order to apply for the Beckham Law you will have 6 months to register with the Tax Agency, after your arrival in Spain. And to carry out the process you must follow 3 basic steps:
Obtain a Foreigner Identification Number (NIE).
Fill in form 030 and register in the Tax Agency census.
Fill in form 149 with the Tax Authorities, and leave proof that you are going to work in a company.
The before and after of the Beckham Law
In order for you to understand the tax benefits that this law can grant you, it is important that we compare the tax situation of foreigners before and after its entry into force in the following chart:
Before Beckham Law
Obligation to pay personal income tax on income earned worldwide (inside and outside Spain).
Payment of progressive percentage tax rate increasing according to the higher income obtained (19% to 45%).
After the Beckham Law
You will have similar benefits in taxation to those considered non-residents
Obligation to pay personal income tax on income obtained only in Spain.
Fixed rate tax payment (24%)
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Many times foreigners who come to Spain in search of new opportunities are unaware of the Spanish tax system and regulations. For this reason, in TAS Consultancy we take care to update you and help you in each of your procedures. Visit our blog and stay updated with the latest business news!