What is the Beckham Law and how can you benefit from it?
Are you considering moving to Spain? Are you still undecided about making the big move? We might have something that will help convince you to work in Spain! Not everyone knows that expats who come to work in Spain can apply for a Special Expat’s Tax Regime – The Beckham law (Régimen Especial para Trabajadores Desplazados).
Normally, when you become a tax resident in Spain, your income is subject to Spanish Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas).
The Beckham Law is a tax regime for foreign workers who live in Spain and allows all workers to pay income and wealth tax as if they were non-residents, during their first 6 years in the country.
The law gained its nickname and popularity after the footballer David Beckham became one of the first celebrities to take advantage of it whilst playing for Real Madrid F.C.
The huge advantage of this system is that it allows expats to pay a 24% flat fee only on the income they receive in Spain, instead of paying progressive tax on their total worldwide income.
To apply to this Special Expat’s tax regime, you have to move to Spain. However it doesn’t apply to foreigners who have been residents in Spain during the past 10 years.
The core of the individual’s activities must be developed in Spain; and workers have a work contract signed with a Spanish company.
Income from abroad shouldn’t represent more than 15% of the total income received in Spain; and those who come to work as administrators cannot own more than the 24% of the company.
How to apply?
Prerequisite
Before starting your application, you must be registered in the Spanish Census of Liable Taxpayers (Censo de obligados tributarios). In order to register in the Spanish taxpayers’ registry, you must file a Modelo 030 form.
Modelo 149 form
In order to apply for this special regime, it is necessary to submit an application to the Spanish Tax Agency (Agencia Tributaria). Bear in mind that you must submit the application within 6 months of starting your employment in Spain. This is absolutely crucial, as after that six-month window, you will no longer be able to apply. The application must consist of a completed copy of the official Modelo 149 form.
Other documents required include:
- Your passport and NIE number
- Social security number
- Job contract
Please note that the application can only be submitted online, which means that you will also need an electronic certificate (Certificado Digital) in order to prove your identity.
Once the tax authorities have received your application, they will review it to make sure that all requirements have been met. They then have 10 working days to either authorise or reject your application.
From then on, you will be able to benefit from this rule for a total of 6 years. However, you must formalise your non-resident tax declarations every year by completing the Modelo 151 form.
Disclaimer: The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax or legal advisors for your individual case.
About Babel Profiles
This article is written by Babel Profiles.
Babel Profiles is a multilingual recruitment agency which specialises in the selection of international professionals.
They are known for their expertise, their creative and advisory focus, and working closely with their clients. Babel Profiles believes that fully understanding clients’ businesses and perspectives, and finding new ideas and ways of working are the aspects that make a difference in a selection process. They are very people-oriented and have a close and informal style. Babel Profiles likes to spend time getting to know their candidates and recognising their skills and competencies in order to understand how they can help and, above all, do everything possible to find the perfect match between the professional, the business and the appropriate role.
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