There is a special personal income tax scheme called the Beckham Law in Spain applicable to natural persons who, for work-related reasons, transfer their tax residence to Spain. This allows them to choose to pay Non-Resident Income Tax, while maintaining the status of a Personal Income Tax taxpayer during the tax period in which the change of residence takes place and throughout the following five tax periods, as long as the conditions set forth in article 93 of the Income Tax Law are met.
The scheme is designed to encourage the hiring of highly qualified management staff, although initially the great beneficiaries were professional athletes. The Law has been amended several times since its entry into force, and currently professional athletes are excluded. The scheme is applicable to annual incomes of less than € 600,000, which will be taxed at 24% and thereafter at 45%. At present, there are several requirements that must be met in order to opt for this regime.
Beckham Law in Spain – conditions
The conditions to be met by people who want to apply to the present scheme are as follows:
- That they have not been residents in Spain during the 10 years prior to moving to the Spanish territory.
- That moving to the Spanish territory occurs as a result of an employment contract, either because a new employment relationship has been initiated or because of a move ordered by the company.
- This scheme may also apply to those who travel to Spain to acquire the status of administrator of a company to which they are not linked due to reasons other than that of that position.
- This scheme would not be applicable to those who earn an income that would be qualified as obtained through a permanent establishment located in the Spanish territory.
- That the income from the work resulting from this employment relationship is not exempt from Non-Resident Income Tax.
People who want to opt for this scheme must submit a request to the Tax Administration within 6 months from the start of the activity that is recorded in the Social Security Register in Spain.
The scheme can be applied in the first year of being a resident and the following five years.
The persons covered by this scheme must submit a special annual income tax return for non-residents.
To find out exactly whether or not you could benefit from the special displaced workers scheme (“the Beckham Law in Spain”), as well as to find the best alternatives for tax optimisation, contact our office, Arintass.