If you are a Chinese citizen interested in relocating your residence to Spain, at Golden Partners, we would like to explain how the tax system in Spain works, and the differences between Beckham Law and Golden Visa in Spain, two of the most sought-after tax scenarios for living and working in this southern European Union country. We would also like to explain the requirements for accessing each and the tax benefits that you could enjoy if you decide to bring your tax residence to Spain, whether for work, entrepreneurship, or investment in Real Estate in Spain or any other financial asset.
西班牙税收制度 Spanish Tax System
The tax system in Spain encompasses a wide variety of taxes that can affect both those considered tax residents (居民税务居民), people who spend more than 183 days a year and whose main economic activity is carried out in Spain; and non tax-residents (非居民) with their residence outside of Spain but earn income from Spanish sources.
The Chinese population residing in Spain is estimated at 224,914 people, making it the sixth most significant in terms of numbers, according to data from the National Institute of Statistics for 2023.
To provide you with a better understanding, here are some key taxes you might be subject to as a tax resident in Spain if you come to work or invest to our country:
- Personal Income Tax (known in Spanish as IRPF) (个人所得税)
- Inheritance and Gift Tax (an additional tax to that reflected in the IRPF)
- Wealth Tax (财产税)
- Value Added Tax (known as IVA) (增值税)
- Transfer Tax and Stamp Duty
- Other taxes: Customs Income, special taxes on alcoholic beverages, hydrocarbons, tobacco, and vehicle registration
- Regional and local taxes such as IBI (Property Tax), the Economic Activities Tax, and the Motor Vehicle Tax.
The tax that concerns foreigners relocating to Spain the most is the IRPF, which is the tax levied on all income obtained by a person residing more than 183 days in the country. For the fiscal year 2024, the maximum tax rate for a tax resident in Spain can reach 54%, placing it among the highest in Europe. Therefore, Spanish legislation offers ways to avoid such high taxation for investors, entrepreneurs, and even for employees relocating to our country.
贝克汉姆法则与黄金签证
Beckham Law
vs Golden Visa
Many clients of Chinese origin ask our Golden Partners team about the differences between these two figures applicable to citizens who come to work or invest in Spain in order to obtain residency for the investor and their family.
What is the Beckham Law
Many clients ask us how Beckham Law works. It is a special tax regime for employees relocated to Spain under an employment contract, and not for freelancers or those who earn their main income from their own economic activities.
It is attractive to high-income individuals as it applies a lower fixed tax rate than that for residents. Moreover, they obtain a Spanish tax residence certificate and consequently they are only taxed on income obtained from Chinese sources. Even if 6 six consecutive years have passed outside of China, the Chinese citizen would still be considered a non-tax resident in China and a tax resident in Spain but subject to a much lower tax regime in Spain thanks to Beckham Law.
What is the Golden Visa
The Golden Visa of Spain is a special residence permit aimed at non-European Union citizens who make a significant investment in the country, whether in real estate or financial assets.
This program is particularly popular among Chinese citizens because it offers the possibility of residing in Spain with their family members and enjoying multiple benefits, such as the freedom to move freely within the Schengen area, which includes up to 22 countries in the European Union (such as France, Germany, or Portugal), as well as Switzerland, Iceland, Norway, and Liechtenstein, totaling 29 European countries.
贝克汉姆法则：要求和福利
Beckham Law: requirements and benefits
How to apply for Beckham Law
Maybe you have wondered how to apply for Beckham Law in Spain this 2024. You must meet the following requirements:
- Not have been a tax resident in Spain in the last 5 years.
- Not be registered as self-employed or a freelance worker.
- Have a new job that justifies your relocation to Spain.
- Comply with specific deadlines related to the change of residence, the application for the special tax regime, and the start of your employment activity in Spain.
Beckham Law’s benefits
The new Beckham Law has the following benefits during the tax period in which tax residence in Spain is acquired and the following 5 years:
- Taxation on income generated in Spain: with the sole exception of income from work, which is taxed worlwide.
- Personal Income Tax rate at 24%: for the first 600,000 euros and, from 600,001 euros onwards, at 47%.
- Wealth Tax only on assets located in Spain: in some regions like Madrid, exemption is up to 99%.
- Model 720 is not mandatory: this is an informative return of assets and rights located abroad.
- Tax benefits for the spouse and children of the expatriate: children under 25 years old (or any age in the case of disability).
黄金签证：要求和福利
Golden Visa: requirements and benefits
What is the Golden Visa?
If you are an investor or entrepreneur and wish to obtain a residence visa in Spain, it is necessary that your capital investment in the country be in one of the following areas and that you maintain this investment during your residence:
- Real Estate properties of a minimum of €500,000 (¥3,830,000): i.e., housing, commercial premises, or land to be used for personal use, rental, or any other form of return.
Commercial businesses for €1M (¥7,660,000): to the acquisition of shares or participations in Spanish companies or to carrying out legitimate commercial activities.
Investment funds for €1M (¥7,660,000): Investors can choose to invest in investment funds, venture capital, or closed-end investment funds.
Bank deposits for €1M (¥7,660,000): in bank deposits in a Spanish financial institution.
Public debt securities for €2M (¥15,320,000): i.e., Treasury Bills, Bonds, and Government Obligations.
What benefits does the Golden Visa offer?
Once you meet the necessary requirements to obtain the Golden Visa in Spain, here are the benefits this visa can offer you and your family in terms of residence and taxation:
- Legal permission to work and reside in Spain: for an initial period of 2 years without the need for permanent residence to maintain visa status.
- Mobility within the Schengen area: Enjoy the freedom to travel to 29 European countries without long-stay restrictions.
- Extension of the visa to family members: to your spouse and children under 18, as well as children over 18 who are financially dependent on you.
- Opportunity to apply for Spanish nationality: As a Chinese citizen, once you have resided in Spain for at least 10 years with the Residence Authorization, you can begin the process to obtain Spanish nationality.
- Attractive tax benefits: You and your family members can benefit from the special tax regime for expatriates, known as the Beckham Law, as long as you meet certain additional requirements.
Both the Spanish Golden Visa and the Beckham Law offer an excellent opportunity to enjoy tax benefits while you establish your residence in Spain and travel up to 29 European countries!
At Golden Partners, we specialize in Real Esate and immigration law. We provide crucial legal guidance to help you make well-informed decisions when investing in Spain, ensuring that you comply with all Spanish and European regulations. Our team has a track record of successful investors who have secured their Golden Visas in Spain with our assistance.
We focus on safeguarding and enhancing your wealth..
Feel free to reach out to us for a complimentary consultation via our contact form.
