The ‘Special regime for workers posted to Spanish territory’, better known as the ‘Beckham Law’, is a special tax rule applicable to all foreigners who begin to live in Spain for work reasons, and offers them great economic benefits to be able to pay taxes.
This means, that this law allows them to pay much less taxes in the country (mainly on their salary), as they can be considered non-residents for tax purposes.
This regime is optional, but you must meet a series of requirements to request it. Starting by submitting the application to the Tax Agency and other documentation. Once the Agency has reviewed the request, it will decide whether to approve it or not.
However, it is still a very advantageous law for those who meet the requirements. Well, the main purpose of the Beckham Law is to attract qualified workers to Spain. Just as happened with the footballer David Beckham (hence the name of the law), who was one of the first figures to benefit from this regime.
How can I access this Law? What are the requirements? In this blog we tell you, so keep reading! And if you have any other questions, you can consult with Entre Trámites and we will resolve your concerns. Schedule a free consultation!
Requirements
As it is an optional law, the taxpayer can decide whether or not to benefit from the Beckham Law. If you do so, you must comply with the following:
- The person cannot have been a tax resident in Spain during the last 10 years.
- There must be a new job that justifies the person’s transfer to Spain: You must have come to Spain because you got a job before entering the country, you have been transferred from a foreign company to the country or you become the director of a company (in which you do not have more than 25% of shares).
- All job responsibilities and tasks must be carried out in Spain; if you do some of them outside, they cannot represent more than 15% of the worker’s total activity.
- Whoever applies for the regime cannot obtain income through a permanent establishment located in Spanish territory. That is, the applicant cannot have a self-employed activity (as a freelancer, for example) and the contracting company must be Spanish.
- A series of deadlines must be met: The deadline to move to Spain, to start work, to apply for the regime,… That is why it is best to plan everything well in advance. For example, you must request the application of this maximum regime up to 6 months after the start of the employment relationship.
Who can’t access this Law?
- Freelancers or self-employed workers
- Sportsmen and professional athletes
- Directors of companies located in Spain of which they own more than 25% of the capital
Benefits of the Beckham Law
The advantages of this law mainly involve lower tax rates and paying taxes only on income generated in Spain. These are:
24% flat rate
The general tax base applied to income from work, rentals, and others is taxed at an almost fixed rate of 24%, up to a maximum of 600,000 euros.
After that amount, it is taxed at 47% with the Beckham Law. Without this, the general tax base would be taxed at a progressive tax rate that can reach almost 50%.
Only pay taxes on income obtained in Spain
With the Beckham Law, only income obtained in Spain is taxed, except for income from work. If this law is not applied, all worldwide income would be subject to taxation in Spain.
Wealth tax on assets located in Spain
Usually, the Wealth Tax is applied to the net value of the taxpayer’s assets at a global level. But, with this law, you would only have to pay taxes on the net value of assets located in Spain.
Form 720: it is not mandatory to present it
As the taxpayer is treated as if he were a NON-tax resident if he requests the Beckham Law, he will not have to submit Form 720 of Declaration of Assets Abroad.
The disadvantages of the Beckham Law
But, since not everything is good, this regime also has some disadvantages, which are:
Double taxation
Taxpayers who benefit from this law will not be able to apply to most double taxation agreements.
Expense deduction
If you apply for the Beckham Law, the person will not have the right to access other tax benefits provided for other taxpayers in the normal regime, such as the deduction of Social Security expenses.
Compensation Exemption
Whoever agrees to this law will also not have the right to exemption from severance pay, nor will they have the right to the minimum deduction for descendants or relatives.
Apply for the Beckham Law: step by step
To help you, we share the step by step to request this regime :
- Download Form 030.
- Send it to the Tax Agency (you can do it online).
- When you receive approval from the Treasury, you must send Form 149.
- In addition to the model, in the final phase, you must attach your passport, NIE, employment contract, and Social Security affiliation number (NUSS).
- Finally, within a period of approx. of 10 days as established by law, you will receive the final acceptance along with a certificate that you must deliver to the company you work for, so they can begin to apply this reduction in the tax rate.
Remember that if this regime applies to you, every year (from April to June) you must file your income tax return using form 151.
Do you need more information about taxes in Spain?
At Entre Trámites we offer various services of management, advice, and support in bureaucratic procedures for self-employed, SMEs, and other types of companies. Contact us! Through our contact form, you can leave your details for us to call you, schedule a free consultation, or simply text our WhatsApp.
