The Beckham Law in Spain

 

The "Beckham Law" is special a Spanish Tax Decree passed in June 2005. The law gained its name after the footballer David Beckham became one of the first foreigners to take advantage of it. However the law is aimed at all foreign workers, particularly with higher incomes, living in Spain. Upon application and acceptance by authorities, such individuals become liable for Spanish taxes based on their income in Spain income and assets for their part.

The ‘Beckham Law’ states that an individual who acquires¬† Spanish Tax Residence and also meets some requirements, can opt to be taxed as a non-resident, keeping the status of Spanish Tax Resident.

Some changes will apply from 1 January 2015, when the main features of being taxed under the “Beckham Law” will be:

  • Non Tax Resident 24% flat tax rate applicable on World-Wide employment income: the excess over EUR¬† 600,000 will be taxed at 45% (47% in 2015).
  • Non Tax Resident progressive tax rates on interests, dividends and capital gains: applicable rates will be from 20% to 24% (2016: from 19% to 23%), only on Spanish source income.
  • Maintaining the status of Spanish Tax Resident: it is not possible to obtain a tax residency certificate in Spain under a Double Tax Treaty, only under Spanish Domestic Law.
  • There is no double taxation method applicable under the Beckham law.
  • Professional sportsmen and sportswomen will be excluded from the regime, but members of boards of directors with less than a 25% interest in the share capital will become eligible.
  • The wealth net tax will apply only to assets and rights located in Spain.
  • The informative tax return on assets and rights located abroad (Form 720) is not applicable for individuals taxed under the Beckham Law.
  • In order to apply for this Regime, the following conditions must be met:
  • The individual must never have been considered Spanish Tax Resident during the last 10 years
  • The assignment in Spain should be a consequence of a labour contract or letter of assignment.
The amended rules will also apply to individuals who relocated to Spain before 1 January 2015, if they meet the current legal requirements before this modification.