Foreigners who wish to come to Spain to work and are aware of the existence of the special tax regime for expatriates often ask Golden Partners if the Beckham Law requires a minimum salary. At Golden Partners, we explain what the Beckham Law entails, its requirements, and its benefits, as well as a series of frequently asked questions that our clients often bring to us.
What is the Beckham Law
Does the Beckham Law require a minimum salary? It is firstly essential to first understand its purpose. This special tax regime for expatriates has been in place in Spain for over 20 years, aiming to attract highly qualified professionals from around the globe, as well as Spaniards who have spent significant time abroad. It applies throughout Spain, although the Basque Country has specific requirements and implementation procedures.
This exceptional regulation is highly advantageous because, though expatriates obtain a Spanish tax residency certificate, they are only taxed on their Spanish income (excluding salary) at a significantly lower rate than regular tax residents. This offers substantial benefits in financial and tax planning.
Applications for the tax regime known as the Beckham Law in Spain have experienced a significant increase in recent years, according to the Spanish Tax Agency.
Beckham Law requirements
To qualify for the tax benefits under the Beckham Law, you must meet certain key requirements outlined below:
Previous tax residency
It is crucial not to have been a tax resident in Spain for the last 5 years. This criterion applies to both foreigners and Spaniards.
Type of employment
This law is not applicable to those working as freelancers or self-employed individuals. If you are an entrepreneur or investor considering relocating your tax residency to the Community of Madrid, you might want to explore the benefits of the Mbappé Law.
New employment in Spain
You must provide evidence of your relocation to Spain for a new job or a significant role within your company. This is essential for benefiting from this tax regime.
Adherence to deadlines
It is imperative to comply with the deadlines for relocation, applying for the regime, and commencing your employment in Spain. Spanish legislation is stringent in this regard, as it pertains to granting this highly advantageous tax regime.
Beckham Law’s benefits
In 2024, the Beckham Law offers benefits for both foreigners moving to Spain and Spaniards returning after spending at least 5 years abroad. These advantages apply during the year of establishing tax residency in Spain and for the subsequent five years:
Taxation only on Spanish income
If you have savings in a foreign bank account or own property abroad, these will not be taxed in Spain for the year of relocation and the following 5years. You would only be taxed on Spanish income. Global taxation applies only to income from employment.
Flat 24% income tax rate
Income subject to Spanish tax (only earnings generated in Spain and worldwide salary) is taxed at a fixed 24% rate on the first €600,000, with any excess taxed at 47%.
Wealth Tax limited to Spanish assets
Assets left abroad or in your home country will not be taxed in Spain. Those relocating under the Beckham Law only declare wealth tax on assets located in Spain. Some regions, i.e., Madrid, offer significant tax exemptions.
Exemption from Form 720
New tax residents in Spain are not required to submit Form 720, which is a declaration of foreign assets, unlike other tax residents and Spaniards.
Tax benefits for family members
Both the applicant and their spouse and children under 25 (or of any age if disabled) can opt to pay non-resident income tax, maintaining their status as IRPF taxpayers.
FAQs abot the Beckham Law in Spain
Can I apply for Beckham Law in Spain if I’m self-employed?
Absolutely not. Neither self-employed workers nor freelancers (for instance, those providing services for a foreign company) can apply for the expat tax regime. The policy is designed to attract international executives, encouraging foreign companies to invest by assigning their employees to Spain to generate new business in the country.
However, if you are a foreigner looking to work in Spain, there are other options available. For instance, the Nomad Visa allows expats to obtain residency in Spain for up to 5 years. Alternatively, if you are a significant investor, you can apply for the Golden Visa with the only requirement being to make and maintain an investment in Real Estate or financial assets.
Can I apply for Beckham Law in Spain if I’m self-employed?
Absolutely not. In fact, if your salary for relocating to Spain does not exceed €600,000, your tax rate will be only 24%, with any excess taxed at 47%. There is no minimum salary requirement.
Let’s look at two examples with this ‘Beckham Law calculator’ of how executives are taxed under the special expat tax regime:
A Spanish executive assigned to Madrid, returning to Spain after more than 5 years living in France, with an annual gross salary of €750,000. Under the Beckham Law, they would pay 24% on the first €600,000 (€144,000) and 47% on the remaining €150,000 (€70,500), resulting in a total IRPF payment of €214,500. This equates to an effective income tax rate of 28.6%. Without the expat regime, returning as a regular tax resident to Spain and applying both state and regional IRPF tables (in this case, for the Community of Madrid, which has one of the lowest tax rates in Spain), they would pay a total of €337,385.50, representing an effective tax rate of 45%. This is a difference of over 16 percentage points for this high-level executive.
If instead they earned an annual gross salary of €80,000, under the Beckham Law they would pay €19,200 in IRPF, and without it, €26,885.50. In the first case, the effective rate would be 24%, and in the second, nearly 34%, almost 10 percentage points more.
Would my foreign income be taxed under the Beckham Law?
No, only income from Spanish sources is subject to taxation. For example, if you purchase a property in Spain and use it for purposes other than your primary residence (such as a second home or rental property), or the interest earned from a new bank account opened with a Spanish financial institution, among others.
However, your salary is taxed worlwide, meaning both the income earned from your relocation to Spain and any other employment income. As you will have a Spanish tax residency certificate, your home country may allow you to deduct taxes paid in Spain on your global salary. Under the Beckham Law, deductions for double taxation are not applicable in Spain.
Does the severance payment exemption apply to me?
No, the severance payment exemption only applies to tax residents in Spain who are not subject to any special tax regime such as the Beckham Law.
Beckham Law: How to apply for this tax regime
To opt for the Beckham Law in 2024, it is mandatory to submit your application to the Spanish State Tax Administration Agency, as well as provide certain required documents:
- Form 149: this is the form for your application, as the annual IRPF declaration is done with another form, Form 151
- Passport and NIE (identity number assigned to foreigners)
- Social Security Number
- Employment contract with the Spanish company
At Golden Partners, as experts in tax law, we can advise you on making the best decision for you and your family, avoiding risks and complying with Spanish and European legislation.
Not all cases are equally straightforward. For example, if you are coming from the United Kingdom, where the fiscal year starts in April instead of January, as in Spain, your case would need to be analyzed more carefully to avoid any errors in your application.
Do not hesitate to contact us through our contact form. The first consultation is completely free, and we can assist you in Spanish, English, or French.
