Beckham Law vs. Digital Nomad Visa: Key Differences

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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?

Spain offers two key mechanisms that can benefit foreign professionals: the Digital Nomad Visa, which provides a legal pathway to residence, and the Beckham Law, a special tax regime available to certain new residents. While they serve different purposes — immigration and taxation — understanding how they interact is essential for optimizing both your legal status and tax position in Spain.

Beckham Law

Introduced in 2005, the Beckham Law - officially Royal Decree 687/2005 - was designed to attract foreign talent by offering a preferential tax regime. It allows qualifying individuals to be taxed as non-residents, applying a flat tax rate to Spanish-sourced income.

Eligibility Criteria:

Recent Relocation: Applicants must not have been tax residents in Spain during the five years preceding their move.
Employment Contract: A binding employment agreement with a Spanish or foreign entity operating through a permanent establishment in Spain is required.
Primary Work Location: The majority of professional activities should be conducted within Spanish territory.

Tax Implications:

Flat Tax Rate: Qualifying individuals are taxed at a fixed rate on their Spanish income, which can be advantageous compared to the progressive tax rates applied to residents.
Duration: The regime applies in the year of arrival and for the subsequent five years.

It's important to note that under this regime, income may still be subject to taxation in the source country, for instance the individual's country of origin, necessitating careful consideration of international tax obligations.

Digital Nomad Visa

In January 2023, Spain introduced the Digital Nomad Visa as part of its “Startup Act”, aiming to attract remote workers and foster entrepreneurship. This visa permits non-EU/EEA individuals to reside in Spain while working remotely for foreign companies.

Eligibility Criteria:

Non-EU/EEA Nationals: Applicants must be citizens of countries outside the European Union and the European Economic Area.
Remote Employment: Proof of employment with, or provision of services to, companies located outside Spain is required.
Professional Experience: Demonstrated professional experience and qualifications relevant to the remote work being conducted.

Tax Implications:

Tax Residency: Holders of the Digital Nomad Visa will become tax residents in Spain, subjecting them to taxation on their worldwide income at the progressive Spanish rates. The Digital Nodad visa does not grant any particular tax benefits. However, if you also qualify for the Beckham Law, you’ll still enjoy a more favorable tax treatment.
Duration and Renewal: The visa is initially granted for up to 12 months and can be renewed, offering a pathway to longer-term residency.

Comparative Analysis

When comparing the Beckham Law and the Digital Nomad Visa, there are several factors to consider:

Nature of Employment: The Beckham Law is tailored for individuals with employment contracts in Spain, while the Digital Nomad Visa suits those working remotely for foreign entities.
Taxation: The Beckham Law offers a flat tax rate on Spanish income while leaving most foreign-sourced income untaxed (at least in Spain). In contrast, the Digital Nomad Visa is “simply” a residence permit and does not come with any tax advantages. Therefore, holders of a Digital Nomad Visa will be taxed on their worldwide income unless they qualify for special regimes (like the Beckham Law).
Duration and Flexibility: The Beckham Law provides a six-year benefit period, whereas the Digital Nomad Visa offers initial residency with options for renewal, accommodating varying long-term plans.

Making the Right Choice

Determining whether to apply for the Digital Nomad Visa, the Beckham Law regime, or both depends on your individual circumstances — including your employment setup, income sources, and long-term plans in Spain. Since the Beckham Law is a tax regime that can be requested after obtaining legal residency (such as through the Digital Nomad Visa), it's crucial to assess eligibility and timing carefully. Consulting with a tax advisor with expertise in Spanish and immigration tax law is recommended to ensure you make the most of these opportunities while remaining fully compliant.

At Tytle, we provide tailor-made services including: