Discover the Beckham Law: Tax Benefits for Expats in Spain

Introduction

Spain’s Beckham Law offers significant tax advantages for expatriates relocating to the country for work. Named after footballer David Beckham, who benefited from this regime during his time at Real Madrid, the law allows qualifying individuals to be taxed as non-residents, leading to substantial tax savings.

In this guide, we explore the benefits, eligibility criteria, application process, and how Taxadora can assist with your annual tax filings under the Beckham Law.

What is the Beckham Law?

Enacted in 2005, the Beckham Law is a special tax regime that permits foreign workers moving to Spain to be taxed at a flat rate of 24% on Spanish-sourced income, up to €600,000. This is notably lower than the standard progressive tax rates, which can reach up to 47%. Additionally, under this regime, only income generated in Spain is taxed, exempting worldwide income from Spanish taxation.

📌 Important Consideration: While the Beckham Law offers favorable tax treatment on Spanish income, global salaries earned outside of Spain are also taxed under this regime. Additionally, double taxation treaties do not apply in most cases, meaning expatriates may not be able to offset foreign taxes against their Spanish tax liability.

Benefits of the Beckham Law

• Flat Tax Rate: A fixed 24% rate on Spanish income up to €600,000. Income exceeding this threshold is taxed at 47%.
• Exemption from Worldwide Wealth Tax: Assets outside Spain are not subject to Spain’s wealth tax during the applicability of the regime.
• Simplified Tax Filing: The regime allows beneficiaries to file a non-resident tax return (Modelo 151) instead of the standard resident tax declaration.

📌 Key Limitation: Unlike standard tax residents, individuals under the Beckham Law cannot claim deductions or apply for tax benefits available to residents.

Eligibility Criteria

To qualify for the Beckham Law, individuals must:

1. Not have been tax residents in Spain in the five years prior to relocation.
2. Relocate to Spain for employment purposes, either as an employee or under certain conditions as a director of a company.
3. Perform work primarily within Spain, though up to 15% of duties can be conducted abroad.
4. Apply for the regime within six months of registering for Spanish social security.

📌 Note: Freelancers and self-employed individuals might be eligible for this tax regime after recent law changes.

Application Process

Applying for the Beckham Law involves:

1. Submitting an application to the Spanish Tax Agency (AEAT) within six months from the start of employment in Spain.
2. Providing necessary documentation, such as proof of employment and non-residency status in Spain for the previous five years.
3. Awaiting approval from the tax authorities to confirm acceptance into the regime.

📌 Taxadora does not handle Beckham Law applications but specializes in managing the annual tax returns required under this regime.

Annual Tax Obligations Under the Beckham Law

Beneficiaries of the Beckham Law must file an annual income tax return using Form 151, specific to this tax regime. The filing period typically falls between April and June for the preceding tax year.

🚨 Global salaries are taxed under the Beckham regime, and double taxation treaties generally do not apply. This means that any income earned outside Spain is subject to Spanish taxation, potentially leading to higher tax liabilities for expatriates with earnings abroad.

How Taxadora Assists with Beckham Law Tax Returns

At Taxadora, we offer comprehensive services to ensure compliance with annual tax obligations under the Beckham Law:

• Preparation and Filing of Form 151: Our experts handle the accurate preparation and timely submission of your annual tax return.
• Personalized Tax Planning: We provide tailored advice to optimize your tax situation within the framework of the Beckham Law.
• Ongoing Support: Our team is available year-round to address any tax-related inquiries or concerns you may have.

📌 While we do not assist with the initial application for the Beckham Law, we ensure that once you are under this regime, your annual tax filings are handled efficiently and accurately.

Conclusion

The Beckham Law presents a valuable opportunity for expatriates in Spain to benefit from reduced taxation on Spanish-sourced income. However, understanding the tax implications on global earnings and the limited applicability of double taxation treaties is crucial for accurate tax planning.

Taxadora is committed to providing expert assistance with your annual Beckham Law tax returns, ensuring a seamless and stress-free experience.

📌 Need help with your Beckham Law tax return? Contact Taxadora today!

We can be reached at info@taxadora.com