Don’t become a tax resident in Spain if you are considering coming here to work. The tax experts at Golden Partners offer you the opportunity to apply for the impatriate tax regime, known as the Beckham Law, to achieve significant tax savings if your company decides to relocate you to Spain.
More and more foreigners are interested in moving to Spain for its great climate and quality of life, as well as its secure legal environment for businesses due to its membership in the European Union. However, the high tax pressure in Spain, which has increased by 2.9 GDP points since the pandemic according to Fedea (Foundation for Applied Economics Studies), frightens foreign investors.
Many of them are unaware of how taxes are structured in Spain, how tax residents or non-tax residents are taxed, and the possibility of being subject to the Beckham Law to reduce their tax bill over several fiscal years. All these aspects are covered in this post.
and the benefit of Spanish tax residency.
How much are taxes in Spain?
The Spanish tax system comprises a large number of taxes for citizens who spend more than 183 days in Spain and have their centre of interests here, thus becoming tax residents, as well as for those who receive income from a Spanish source by holding assets in Spanish territory.
Just to give you an idea, these are all the taxes you may be subject to as an individual and tax resident in Spain:
- Personal Income Tax (IRPF)
- Inheritance Tax (also for giftes)
- Wealth Tax
- Value Added Tax (VAT)
- Transfer Tax and Stamp Duty
- Other taxes: Customs duties, special taxes such as those on alcoholic beverages, hydrocarbons, tobacco or vehicle registration
- Regional and local taxes such as Property Tax (IBI), Business Activities Tax or Vehicle Tax.
The tax that most concerns foreigners who move their tax residence to Spain is the IRPF, which applies to all income earned by the person who spends more than 183 days in Spanish territory and has their main centre of economic interests here.
However, in 2024 the maximum effective rate can reach 54%, making Spain the fourth country in Europe, only behind Denmark, France, or Austria. This is why many foreigners wonder how not to become a tax resident in Spain to avoid the full progression of the tax.
How much is non resident tax in Spain?
Contrary to tax residents, there are non-tax residents, i.e.; citizens who are in Spain for less than 183 days a year but receive income from a Spanish source.
Their tax rate is lower, ranging between 19% and 24%, depending on the type of income (for example, interest from a bank account or a vacant or rented property) and the country of residence (inside or outside the European Union).
Don't become a tax resident in Spain: request the Beckham Law
For all the above reasons, more and more foreigners are asking Golden Partners how to avoid taxation as a tax resident, given the high tax burden that comes with acquiring this status. To avoid this, you can opt for the expatriate regime, better known as the Beckham Law.
There are several key points of the Beckham Law which was recently updated (check the official state bulletin here) and may interest you if you are a worker, professional, entrepreneur, or investor relocated to Spain and wish to achieve significant tax savings on your IRPF (Personal Income Tax) as well as on the declarations of assets you present abroad, whether or not it is your country of origin.
What is the Beckham Law in Spain
The Beckham Law is the name given to the special regime for workers relocated to Spanish territory in the Personal Income Tax Law (IRPF), which offers a series of tax benefits to those who move their residence to Spain for work or investments, provided they have not resided in Spain during the 10 years prior to the application for the special regime.
This special tax regime for expatriates was named after the former Real Madrid footballer, David Beckham, who was one of the first taxpayers to benefit from it.
Here are some of the benefits of the Beckham Law:
- Taxation on income generated in Spain: Income generated abroad, normally in the country of origin, is not taxed.
- Personal Income tax rate at 24%: the great advantage of the Beckham Law is that the income from a Spanish source of the person relocated to Spain is taxed at 24% for the first 600,000 euros and, from 600,001 euros onwards, at 47%.
- Wealth Tax only on assets located in Spain: The expatriate must file a Wealth Tax return in Spain only for assets located in Spanish territory. Some Autonomous Communities such as the Community of Madrid offer high exemption rates.
- The 720 Model is not mandatory: The person relocated to Spanish territory who acquires tax residence in Spain is not obliged to file the 720 Model (informative declaration of assets and rights located abroad) as the rest of tax residents, including Spaniards, must do.
- Tax benefits extendable to the expatriate’s spouse and children: Provided that, in the case of children, they are under 25 years old (or any age in case of disability) they can opt to be taxed under the Non-Resident Income Tax in Spain, maintaining the status of IRPF taxpayers.
Save taxes with the Beckham Law
Thanks to the Beckham Law, you can benefit from all the above advantages during the year of relocation in which you acquire tax residence in Spain and the following five years. However, it requires a declaration model and an in-depth analysis of compliance with the requirements, for which a tax expert is advised.
This is why Golden Partners is at your complete disposal to assist you with the application and granting of the impatriate tax regime, as well as with the preparation and filing of your tax returns.
We can assist you by e-mail or phone in Spanish, English or French.
Do not hesitate to contact us through our contact form.
