Spain’s Beckham Law allows qualifying expats to have their Spanish income taxed at a flat 24%. This can represent a significant savings as the normal Spanish tax rates can reach as high as 47%. Most importantly, no foreign income streams are taxed.

What officially is the Beckham Law?

The official name of the Beckham Law is Spain’s Special Tax Regime for Inbound Workers. Introduced in 2005, it’s essentially a tax exemption scheme to attract global talent. The government’s goal was to entice foreign investors, skilled professionals and high net worth individuals/families to come live and work in Spain.

Who qualifies for Spain’s Beckham Law?

The eligibility requirements can be a little tricky as Spanish immigration and tax law are often complicated and the requirements have frequently changed. Essentially, to qualify for the Beckham Law tax exemption, you will need to meet one of the the below criteria:

Work for a Spanish company, subsidiary, qualified start-up or research facility

To qualify in this category, you will need to have a job offer from a Spanish company. This company must be registered with the Spanish tax office (commonly know as the Hacienda). This applies to all types of employer relationships. The work you’ll be doing in Spain must be your primary job – you can carry out a maximum of 15% of your overall work abroad.

Individuals that are directors of Spanish companies (as opposed to employees) are also available for the tax exemption under Spain’s Beckham Law. However, this is where it gets a little tricky. If the Spanish company has verifiable economic activity, then there are no limits on the percentage of company ownership. If the entity does not have verifiable economic activity and is considered a patrimonial entity (for example an asset management company), then you only qualify if you own less than 25% of the company.

You also qualify if your employer from another country transferred you to Spain (maintaining the same contract), but assigned you to a Spanish company. In this situation, you will need a letter from your employer ordering the transfer to a Spanish firm, which again must be registered with the Hacienda.

Those in possession of a Spanish digital nomad visa

This eligibility requirement can be a little confusing if you do a simple internet search. This is because the Spanish government recently amended Spain’s Beckham Law when it introduced the digital nomad visa. In the past, remote workers did not qualify for the Beckham Law tax exemption. However, with the recent introduction of the digital nomad visa, these workers now qualify.

Self employed workers who have a Spanish client(s) and are highly qualified individuals

To be eligible under this category, you must offer services to Spanish start-ups, or be involved in training, R&D or innovation activities. At least 40% of your income must be derived from invoicing related to these services.

Not have been a Spanish tax resident in the last five years

As Spain’s Beckham Law is essentially a tax law, it is very specific about your tax residency in Spain. You do not qualify if you have been a Spanish tax resident in the past five years.

Become a Spanish tax resident

This probably goes without saying, but you must become a Spanish tax resident to qualify for the Beckham Law tax exemption. Note that the Hacienda is shockingly efficient, so we do not at all recommend trying to get around this requirement.

Unsure about your eligibility for Spain’s Beckham Law? You can contact our founder directly at fabiana@madrid-estate.com or WhatsApp +34 680 306 337 to learn about Madrid Estate’s vetted network of international and local legal and tax professionals.

Who doesn’t qualify?

Professional athletes

Oddly enough, as David Beckham was one of the first to take advantage of this law, professional athletes no longer qualify. This is irrespective of their income level or status within their respective fields. Both Cristiano Ronaldo and Lionel Messi were prosecuted for tax-related offenses after the law’s removal, which highlights both issues with tax avoidance in professional football and the power of Spanish tax authorities. 

Most freelancers without Spanish digital nomad visas

If you are a freelance worker/independent contractor (known as an Autónomo in Spain), you are not eligible unless you meet one of the requirements detailed above.

Anyone owning 25% or more of the eligible company

This can be confusing. If you are a director of an asset management company, you can’t own more than 25% of the firm. But if your company creates jobs and stimulates economic activity in Spain, there is no cap on ownership.

How long is one eligible for the tax exemption?

Six years.

What happens after six years?

You are taxed under Spain’s progressive tax system (up to 47%) and your foreign income streams will also be taxed.

What are the key benefits of Spain’s Beckham Law?

Flat tax on Spanish income up to 600k€

This is a big deal if you want to live in Spain and are a high earner. Spain has a progressive tax system, meaning the more you make, the higher your tax bracket. High earners can expect to see as much as 47% their income taxed . Under Spain’s Beckham Law, your income will be taxed at a flat rate of 24%. After 600,000€, you will automatically be taxed 47% on all income.

No tax on foreign income/assets

This is particularly attractive for high net and ultra high net individuals with significant financial assets. This includes no tax on dividend income, interest income, rental income nor capital gains.

Some family members are also eligible

Your immediate family members may also be eligible for the tax benefits offered under the law. The Spanish government considers these to be immediate family members:

• Your spouse
• Any children under 25 years of age or children with disabilities of any age (although if they are not high income earners, there might be more tax efficient options than the Beckham Law)
• The parent of your children, even if you are not married

Immediate family members that want to take advantage of the tax scheme must also:

• Move to Spain with or after the main taxpayer, provided the first tax period in which the Beckham Law applies has not ended.
• Earn an income lower than that of the main taxpayer.
• Not have been fiscal residents in Spain during the five tax periods prior to their move to Spanish territory.

How does one apply?

In simple terms, you must apply at the Spanish tax office within six months of meeting eligibility requirements. You will need to submit the following supporting documents:

A photo ID

Make sure it is sized properly. There are photo booths around Spain (typically located close to bureaucratic offices) where you can easily get an eligible photo taken for 5-10€.

Your NIE

Your NIE is your national identification/taxation number. It can be confusing because the terms NIE and TIE are often used interchangeably. To clarify, your NIE is your tax ID number. Your TIE is the card most nationalities are issued that illustrates your NIE.

Your Spanish social security number

This is actually very easy to obtain. Spanish tax offices are usually very efficient. Just bring proof of your NIE, proof of your legal right to work in Spain and your completed Modelo TA.1 form. As with any visit to a Spanish bureaucratic office, make copies of all documents prior to your visit. If your paperwork is in order, the process only takes a few moments. 

Proof that you are employed in Spain

This includes your employment contract and any other supporting documentation. If you are eligible for Spain’s Beckham Law for reasons other than employment with a Spanish firm, you will need to bring the relevant documentation.

Proof that you haven’t been a Spanish tax resident in the past five years

Regrettably, this may require a conversation with the IRS or UK tax authority.

Our recommendation for applicants

The Spanish bureaucracy can be intricate and opaque to many expats. Additionally, the costs can be high if the application isn’t done properly. Thus, we highly recommend you work with a qualified accountant and lawyer that are familiar with the process.

Don’t risk your investment. Let us introduce you to our vetted, international legal and tax partners for a secure purchase strategy. Don’t hesitate to contact our founder directly at fabiana@madrid-estate.com or WhatsApp +34 680 306 337 to learn more.