HOW “LEY BECKHAM” WORKS

Incoming workers to Spain may opt for a special tax treatment on their revenues. This is commonly known as “Ley Beckham”, and it is regulated in art. 93 IRPF (personal income tax).

The main advantage of that regime is that, despite being a Spanish tax resident, all your worldwide working revenues (“rentas del trabajo”) will be taxed at 24% up to 600.000 euros (47% for any amount exceeding 600.000 euros). As such, only some revenues will be subject to tax regulation for non-Spanish tax residents (Impuesto sobre la Renta de no Residentes). Without that special tax regime, all your worldwide revenues would be taxed up to 45%-54% (depending on the region of residence).

This special regime will apply for the year of arrival plus the following 5 years, though the taxpayer can opt out during that period. After that, the taxpayer will be subject to regular personal tax regime for Spanish tax residents. Also, some relatives can also apply for this tax regime, such as wife/husband and children younger than 25 years old.

There are some other advantages attached to this tax regime:

1. You do not pay taxes in Spain for any other type of revenues not sourced from Spain, such as capital income, capital gains, royalties, etc.
2. You are not subject to Spanish wealth tax for any assets not located in Spain (Impuesto de Patrimonio and Impuesto temporal de Solidaridad de las Grandes Fortunas).
3. You do not need to submit model 720 (assets located out of Spain)

Also, capital gains or capital income from Spain will be taxed at the 19%-28% of the regular tax regime.

However, there are some drawbacks, such as:

1. In most cases, you can not apply Doble taxation treaties, Therefore, you will not be able to deduct any foreign income taxes such as withholding tax on dividends etc.
2. You can not deduct any expenses such as Social Security.
3. Severance indemnity is fully taxable.
4. No deduction for reinvestment for your capital gain on primary residence.
5. No exemption for any work carried abroad (art. 7p LIRPF).
6. You cannot submit your tax revenues along with your relatives
7. Not possible to apply personal or family reductions or 30% reduction on irregular revenues or with a generation period of more than two years.

Requirements are the following:

1. You cannot have been a Spanish tax resident in the last 5 years prior to moving to Spain.
2. You need to become a Spanish Tax resident.
3. You need to physically move to Spain.
4. You need to move Spain to work, either
   1. Because of a labor contract (except for professional sportsman) or because your company has sent you to work to Spain (with a company letter in that sense)
   1. To become representative of a Spanish company (in which you do not hold a stake higher than 25%).
   1. As a Digital nomad can also apply with a written consent from the company they work for (not for self-employed digital nomads)
   1. Setting up a Spanish start up
   1. To provide highly-qualifies professional services to start ups
   1. To carry out training, research, development of innovation activities
5. At least 85% of work need to be in Spain
6. Not having any revenues coming from a Spanish Permanent Establishment
7. You need to have a Spanish Tax Number (NIF) and registered as a taxpayer (model 030)

The following people cannot apply this special tax regime:

1. Self-employed, freelancers
2. Company representatives holding more than a 25% stake on the company.
3. Professional athletes and sportsmen.

It is important to point out that regime is optional. As such, taxpayer need to apply for that regime within the first 6 months after registering to Spanish Social Security by filling in model 149. With that communication, regular taxation on revenue will apply.

Model 149 need to be filled individually. So, you also need to submit one for each relative interested on the tax regime.  To fill model 149, you need to provide additional documentation, that vary depending on the case, such as:

1. Passport or personal ID.
2. Registration on Spanish Social Security
3. Employer certificate of the labor contract, request to move to work to Spain or working from a distance consent.
4. Company certificate on the condition of being a company representative.
5. Certificate of the condition of start up company
6. Certification form ENISA (Empresa Nacional de Innovación)
7. Marriage and/or birth certificates

If Spanish tax authorities agree to apply that regime, they will issue a certificate that you will need to hand over to the company so they will apply the correct withholding tax.

Then, yearly (April to June), you will need to submit the corresponding tax revenues model 151 instead of regular model 100.

AEME Advocats can help you to apply for this special tax regime and the related obligations.