Beckham Law in Spain: How Expats Can Benefit from a Special Tax Regime

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Tytle

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Table of content

Impatriate Regime and Decreto Crescita: What Is It?

Tax Break in Italy: Who’s Eligible?

Tax Cuts in Italy: How Much Can I Save?

How to Apply for Italy's Tax Breaks

What’s Included in The Tax Break?

The Beckham Law, officially known as Spain's Special Expat Tax Regime, offers significant tax advantages to foreign professionals relocating to Spain. Introduced in 2005, this legislation allows eligible individuals to be taxed as non-residents, applying a flat rate to their Spanish-sourced income. This regime aims to attract international talent by providing a more favorable tax environment.

What is the Beckham Law?

Under the Beckham Law, qualifying expats are taxed at a 24% flat rate on their Spanish-sourced income up to €600,000. Income exceeding this threshold is taxed at 47%. This regime is applicable for up to six years, encompassing the year of arrival and the following five years. Notably, beneficiaries are taxed only on their Spanish-sourced income, while foreign income remains exempt, offering a considerable advantage over the standard progressive tax rates that can reach up to 45% on worldwide income.

Eligibility Criteria

To benefit from the Beckham Law, certain conditions must be met:

Non-Residency in Spain: Applicants must not have been tax residents in Spain during the five years preceding their relocation.
Employment in Spain: Relocation should be the result of an employment contract with a Spanish company or a Spanish entity. Self-employed individuals are generally excluded unless they meet specific criteria.
No Income from Permanent Establishments Abroad: The applicant should not receive income through a permanent establishment located outside Spain.
Application Deadline: The application for this special tax regime must be submitted within six months from the start date of employment in Spain.

Application Process

The steps to apply for the Beckham Law are as follows:

Obtain a Spanish Tax Identification Number (NIF): Getting a Spanish Tax Identification Number (NIF) is essential for all tax-related matters in Spain.
Register with Social Security: Ensure registration with the Spanish Social Security system, as it is a prerequisite for employment.
Submit the Application: File the application for the special tax regime with the Spanish tax authorities (Agencia Tributaria) within the stipulated six-month period. The application should include personal identification, employment contracts, and any other required documentation.

Beckham Law in Spain: How Expats Can Benefit from a Special Tax Regime — Thomas Astleitner / Pixabay

Benefits of the Beckham Law

The primary advantage of the Beckham Law is the reduced tax rate on Spanish-sourced income, which can result in substantial tax savings compared to the standard progressive rates. Additionally, foreign income is generally not subject to Spanish taxation under this regime, making it particularly beneficial for individuals with significant income from abroad.

Considerations and Limitations

While the Beckham Law offers attractive benefits, certain limitations exist:

Duration: The regime is limited to six years. After this period, individuals become subject to the standard tax rates on their worldwide income.
Income Scope: Only Spanish-sourced employment income is subject to the reduced flat tax rate. Foreign income, including passive income and capital gains, is fully exempt from Spanish taxation but may still be taxed in the source country.
Ineligibility of Professional Athletes: Initially, the Beckham Law included professional athletes. However, since 2010, they have been excluded from this special tax regime.

Recent Developments

In December 2024, the Spanish government enacted Royal Decree-Law 9/2024, introducing several amendments to the existing tax laws. However, this decree was repealed on January 22, 2025, meaning that the previous regulations, including the Beckham Law, remain unchanged.

Conclusion

The Beckham Law presents a valuable opportunity for expats seeking to optimize their tax obligations while working in Spain. Understanding the eligibility criteria, application process, and potential benefits is key to making informed decisions about tax planning strategies. Given the complexities involved, consulting a tax expert can help ensure compliance and maximize the advantages of this special regime.

At Tytle, we provide tailor-made services including: