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TAXES

Beckham Law: What foreigners need to know about Spain’s special tax regime

Spain’s Beckham Law is a tax regime that enables foreigners who move here to pay much lower taxes than normal. Find out what tax benefits it brings, the changes introduced in 2023, who is eligible and how to apply.

Published: 25 August 2023 15:37 CEST
Beckham Law: What foreigners need to know about Spain's special tax regime
Spain's Beckham Law was nicknamed as such as the legislation was introduced around the time of the English footballer's signing for Real Madrid in 2003, and he was the first foreigner to use it to pay less tax. (Photo by CHANDAN KHANNA / AFP)

The Beckham Law was first introduced in 2004 to attract talent and highly qualified workers to Spain with fiscal incentives.

It was nicknamed after the footballer David Beckham as he was the first one to take advantage of it when he moved here to play for Real Madrid.

The law’s official name is Régimen Especial de trabajadores desplazados o impatriados. These ‘displaced workers’ or ‘inpatriates’ are generally foreign employees who are brought to work in their company’s subsidiary in Spain. 

If you qualify for the Beckham Law, it means that you can pay tax in Spain as if you were a non-resident for a total of six years, even though you live here.

Essentially,  you will pay a flat fee of 24 percent up to €600,000.

You will pay this only on income you earn in Spain, instead of a progressive tax on worldwide income. The normal progressive taxes for Spanish residents range from 19 to 47 percent.  

In other words, even if you reside in Spain you’ll pretty much be treated as a non-resident for tax purposes (spending more than 183 days in a year usually makes you a tax resident).

As if benefitting from a flat income tax fee of 24 percent wasn’t enough, you also get advantages when it comes to capital gains tax as well as inheritance and gift tax. 

The sale of assets or property abroad will not be taxed in Spain if you qualify and profits from the sale of property in Spain will be taxed at a fixed rate of 19 percent.

Up to 2020, 27,000 people have benefitted from the Beckham Law’s fiscal incentives.

What are the recent changes to Spain’s Beckham law?

In 2023, the Beckham Law was linked to Spain’s new Startups Law and modified to include some more favourable conditions for remote workers and entrepreneurs.

The Startups Law, a far-sweeping bill aimed at bringing more foreign talent to Spain through less stringent bureaucracy and fiscal incentives, has been described as some as a recalibration of the Beckham Law. That’s only partly true, as each law addresses different matters.

What has been changed in 2023 in terms of the Beckham Law is that people can apply if they have not been residents in Spain during the five previous years  whereas it used to be 10 years.

Additionally, family members can now also benefit from the Beckham Law. Previously, it was only the worker who applied for it that could benefit but Spanish Law 28/2022 states that from 2023 onwards a spouse and children under 25 years of age can now also benefit and pay less tax if they are working in Spain. If children are disabled there are no age limits.

The relocation to Spain may now also take place either in the first year of applying for the Beckham Law regime or during the previous year.

There are better conditions for company directors as well. Previously a minimum shareholding of 25% of the capital was required, whereas now this limit will only be need to be met by directors of asset-holding entities.

Who qualifies for Beckham’s Law?

Not everyone who moves to Spain is eligible for Beckham’s Law, unfortunately.

There are several requisites you must meet. These are: 

– You must not have been resident in Spain during the five previous years.

– You must have moved to Spain to take up work and have an employment contract with an employer in Spain or work remotely for a company outside Spain. 

– You cannot be self-employed, unless it’s an entrepreneurial activity that is of an innovative nature and is of particular financial interest for Spain. For this, you must have a favourable report issued by the General State Administration.

How to apply for Beckham Law tax conditions

If you want to benefit from the Beckham Law, you must apply within six months of arriving in Spain, if not, you will no longer be eligible.

You need to apply with Spanish Tax Agency by filling in and sending form or modelo 149.

You will also need: 

– Your passport and NIE number, which can be found on your TIE or green residency card.

– Your Social Security number

– Your employment contract with a Spanish company or contract as a remote worker and your digital nomad visa. 

Keep in mind that you will also have to apply for a Spanish residency permit, the process explained above refers to getting better tax conditions. The Spanish government recently introduced the EU’s Blue Card for highly-skilled and qualified workers to make it easier for such non-EU workers residency in Spain. 

Keep in mind as well that even if you don’t qualify for the Beckham Law, the Spanish government has also introduced a digital nomad visa for non-EU remote workers. This can give you residency rights but not the fiscal advantages of the Beckham Law. 

READ MORE: What are the pros and cons of Spain’s digital nomad visa?

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For members

WORKING IN SPAIN

What’s the law on having two jobs in Spain?

With the current cost of living crisis, working more than one job is becoming more and more common, but what are the rules on working multiple contracted jobs in Spain and the tax implications of this?

Published: 25 June 2024 13:24 CEST
What's the law on having two jobs in Spain?

Often it’s necessary to have more than one job at a time, particularly if they don’t pay well and you’re struggling to make ends meet.

In fact, historically that is part of the reason why establishments stay open so late and why siestas were so common – because people would have one job in the morning and then go home for a rest before starting their second.

This is still commonplace today and is in fact becoming more and more popular, with the rise in the cost of living, driving an increasing number of people to take up a second job.

Whatever your reasons for having two jobs or more – to save up more money or gain extra experience and work your way up, there are some financial implications you should be aware of.

What does the law say?

Currently in Spain, there is no restriction that prevents a person from having a second job, with two contracts in two different companies, for 80 hours a week.

According to data from the first quarter of this year from the Active Population Survey (EPA) prepared by the National Institute of Statistics (INE), the number of people with a second job in Spain stands at 591,300, although according to affiliation data of Social Security, some 800,000 people have more than one position.

This trend has been seen in each quarter of the EPA since 2022 and, right now, is close to a historic number.

Categories you should be aware of

There are two types of categories when you work in multiple jobs in Spain – these are pluriempleo and pluriactividad. Pluriempleo literally means multiple employment. This is understood as a person who works as an employee in two or more companies under the same Social Security regime.

In this way, it differs from pluriactividad or multiple activities, which is when people work for others and have their own business at the same time or their second job is under a different social security regime.

For example, if you work as a hotel receptionist in the morning and then in a restaurant at night, these positions are considered to be part of the same regime, but if you work in a hotel in the morning and then as a nurse in a hospital at night, these are two different careers and therefore social security regimes.

If you’re self-employed as well as having a contract job, this is a slightly different situation. To find out more, read our guide below. 

READ ALSO – Self-employed in Spain: What are the tax rules if you do two or more jobs?

What are the tax and social security implications?

If you have two separate jobs, you are required by law to report your situation to Social Security, and to each of the companies you’re employed by.

When it comes to the Tax Agency, it’s important to note that you are obliged to submit your yearly Income Tax return (Renta), when you are paid by more than one employer and your income exceeds €22,000 per year.

READ ALSO – EXPLAINED: The key changes to Spain’s 2023/2024 annual tax return

In 2024, the maximum social security contribution base for employees has been set at €4,720.50 per month. This means, that regardless of whether your income from two positions exceeds this amount, the social security base will not be more than this.

The amount of IRPF (Personal Income Tax) must also be taken into account. If you are combining two contracts, it’s important to calculate the withholding tax.

This is because companies calculate personal income tax based on your annual compensation expectations. They do not take into account the existence of another job, so they apply the discount depending on what they are paying you only.

This means that they will keep less than what they should and when you’re filling out your Renta yearly income tax return, you will most likely have to pay the extra to make up the difference. 

In this case, you should request that both companies calculate personal income tax according to your earnings, so that you can get a good idea of the amount you have to pay working two positions.

You may also consider hiring a gestor or accountant to file your yearly tax return for you if you have a particularly complicated situation and work three or more jobs for example. 

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