For those who come to Spain to work—with an income level starting from €55k annually (indicative figure) or simply because they have income from foreign sources—there is a very interesting tax option. It allows you to be taxed as a non-resident, despite being a resident, for up to six years at a fixed 24% rate, avoiding the progressive scale, which in the regular system can reach 54% in some regions, like the Comunitat Valenciana (and even in Madrid, the lowest in Spain, it doesn’t drop much below 45%). Under the Beckham Law, annual income up to €600k will be taxed at 24% (and every euro above €600k is taxed at 47%).
Requirements to meet are:
- Relocation to Spain due to an employment contract with a Spanish employer. This can also be through a secondment letter ordered by the employer, to serve as an administrator of a Spanish entity, or by obtaining the “digital nomad visa” and choosing Spain as your residence for teleworking.
- Not having been a resident in Spain during the previous five tax years.
- Exercising the option within six months, providing the required documentation in each case. The period starts from the date of commencement of the activity registered with the Spanish Social Security. It has nothing to do with the 183 days of tax residence, nor is it counted from when you arrive in Spain.
- Not engaging in economic activity through a permanent establishment in Spain, except in the case of digital nomads. This means you cannot work as a self-employed individual.
Advantages:
- Tax savings on your income generated in Spain.
- Exemption from taxation on your foreign-source income (except for employment income and income classified as income from economic activities).
- No obligation to file the Modelo 720 (declaration of assets abroad) during the application of the regime.
- Only pay Wealth Tax on assets located in Spain.
It is necessary to review your specific scenario: expected income level for future years, sources of income (from employment or capital, Spanish or foreign), personal and family situation, whether you own or rent your residence, etc. Sometimes, the criterion of the €55k annual income level should not be the only factor to consider (it may be higher or lower, depending on each case), as you may choose to apply the Beckham Law because you expect to receive bonuses in future years that will increase your earnings.
Disadvantages:
- Most of the reductions and deductions provided in the Personal Income Tax Law (IRPF) do not apply. For example, severance payments will not be tax-exempt, as they may be in certain cases, or the 7p exemption for work performed abroad will not apply.
- As an exception, employment income and income from economic activities obtained outside Spain are still taxable.
- Double taxation treaties are not entirely compatible with the Special Expatriate Tax Regime (RETD), which can cause complications.
However, there are court rulings that support that benefits in kind considered exempt under the IRPF also apply to taxpayers who choose to be taxed under the special regime “Beckham Law”; for example, meal vouchers or private health insurance.
Application:
You must gather all the necessary documentation that proves compliance with the requirements and complete the official application form. It is submitted exclusively online through the electronic headquarters of the Tax Agency, after registering in the Census of Taxpayers by submitting Modelo 030 if necessary, and a digital certificate is required for identification.
Then, the Tax Agency verifies the application and may request additional documentation. It usually resolves and issues the notification within 10 working days. At SPA Finanzas, you will receive the notification in a 100% online process, so the procedure can be very fast.
This practice typically contacts the employee’s company directly, minimizing the applicant’s effort and ensuring a smooth and worry-free process. Once the company (if it is an employee) receives the certificate issued by the Tax Agency confirming that you have activated your special tax regime, it will start applying the 24% tax rate, payslip by payslip. You will then have only one annual obligation, which is to file the annual tax return. The Beckham Law will continue to apply, unless you renounce it or are excluded, until the period of up to six years is completed.
In the new developments introduced in 2023, the option was also extended to include family members (spouse, children under 25 years of age or with disabilities, and in the absence of a marital bond, the parent of the children).
At SPA Finanzas, various service packages are offered, tailored to your needs: application only, with advice, and with continuous advice. Feel free to get in touch for more information or to discuss the best option for your specific situation.
