The Beckham Law is one of the most effective mechanisms to pay less taxes in the Spanish territory and in this article we tell you everything you need to know about it. We will see what exactly this Special Regime for Displaced Workers consists of, what requirements you must meet, and how to apply for it step by step (including all the links you need to access the application forms).
What is the Beckham Law?
The Beckham Law, also known as Special Regime for Displaced Workers (or, “Régimen Especial para Trabajadores Desplazados”), is a tax regime applicable to all foreigners living in Spain for employment reasons. This regulation allows them to pay less taxes in the country, specially on their salary.
This measure, regulated under Decree-Law 687/2005, will be linked to the Startup Law Reform which promises modifications for the year 2023 regarding foreigners and entrepreneurship, as we will see below.
Requirements to apply for the Beckham Law
To apply for the Beckham Law and save money, you should keep in mind the following conditions:
- Not to have resided in Spain for the last 10 years.
- To have come to Spain for work purposes. That is, you received a job offer (which you got before entering the country), you have been transferred from a foreign company to Spain or you became the director of a company (in which you have no more than 25% of its shares)
- All job responsibilities and tasks must be developed in Spain. If part of these are carried out abroad, they cannot represent more than 15% of the total activity of the worker.
- You do not receive income that would qualify as earned by a permanent establishment located in Spain. Thus, the contracting company must be Spanish.
- Request your application for this regime no later than 6 months after the beginning of the employment relationship that has brought you to Spain
Note: The following three groups of foreigners cannot apply to this regime: Freelancers or self-employed workers, professional athletes and directors of companies located in Spain that own more than 25% of the capital
Below you will find the detailed instructions to follow in order to apply for the Beckham Law:
- Download the Form 030.
- Send it to the Tax Agency (you can do it online).
- When you receive the approval from Hacienda (Treasury), you must send the Form 149.
- In addition to this form, in the final phase you will have to attach your passport, NIE, employment contract, and Social Security affiliation number (NUSS).
- Finally, in a period of approximately 10 days, according to the law, you will receive the final approval along with a certificate that you must deliver to the company you work for, so they can begin to apply this reduction to your tax rate.
Note: Remember that if this regime applies to you, every year (from April to June) you must make the Income Tax Return using form 151.
The Beckham Law in 2023
The Beckham Law, which allows foreigners to work and be taxed as non-residents for a limited number of years, will bring a series of modifications for 2023 in case it is approved by the Senate in the coming days.
This regulation establishes a reduced 24% tax rate for incomes below 600,000 euros and 47% for those above that percentage. This new law will extend this regime to professionals, entrepreneurs, and investors who expatriated to Spain.
Modifications of the Beckham Law
- The period of non-residence in Spain prior to the year of expatriation will be reduced from 10 to 5 years.
- The expatriation or relocation may occur both in the first year of application of the regime or in the previous year.
- Other reasons for a job transfer. Previously, it could be applied to it if it was a physical displacement due to an employment relationship or due to the acquisition of the status of administrator. However, if it comes into force, this law will also allow remote work activity (telework), using computers, telematic and telecommunications means and systems.
- If the company has the status of a holding/property company (“sociedad patrimonial”), a participation of less than 25% of the share capital will be required.
- It is planned to carry out an economic activity qualified as an entrepreneurial activity.
- Those who perform a highly-qualified professional activity that provides services to companies or conducts training activities may also apply.
- The text also extends the special tax regime for spouses and children under 25 (in the case of having a disability any age would be valid) accompanying the applicant or later, only if it occurs during the expat’s first year of residence.
Keep in mind that if this regime applies to you, every year (from April to June) you must make the Income Tax Return using Form 151.
Finally, in Entre Trámites we offer various services of management, advice and support in bureaucratic processes for foreigners, including the issuance of TIE, NIE or accounting management, and doing your taxes.