What is The Beckham Law in Spain?

The Beckham Law in Spain, officially known as the Special Tax Regime for Inbound Workers, is a tax incentive designed to attract highly skilled foreign professionals and high-net-worth individuals to live and work in the country. It was nicknamed after the famous footballer David Beckham, who was one of the first to benefit from it when he joined Real Madrid in 2003.

Key Features and Tax Advantages

The primary benefits of the Beckham Law are that it allows a qualifying individual to be taxed as a non-resident for a limited time, even if they live in Spain for more than 183 days a year (which would typically make them a tax resident).

• Flat Tax Rate: Instead of the standard progressive tax rates for residents (which can be as high as 47%), the Beckham Law allows a flat tax rate of 24% on Spanish-sourced employment income up to a maximum of €600,000 per year. Any income over this amount is taxed at the regular, higher rate of 47%.
• Taxation on Spanish-Sourced Income Only: A major advantage is that the individual is only taxed on income earned in Spain. Their worldwide income, such as from investments, foreign rental properties, and capital gains from assets outside of Spain, is generally exempt from Spanish taxation.
• Duration: The special tax regime applies for the first six years of residency in Spain (the year they move and the following five tax years).

Eligibility Requirements

To qualify for the Beckham Law, an individual must meet several specific criteria:

• No Prior Residency: They must not have been a tax resident in Spain during the five years prior to their relocation. (This was previously 10 years but was changed with the “Startups Law” in 2023).
• Reason for Relocation: The move to Spain must be for work purposes, such as an employment contract with a Spanish company, a transfer from a foreign company, or for a digital nomad visa.
• Application Deadline: The application for the regime must be submitted to the Spanish Tax Agency within six months of starting work in Spain or registering with Spanish Social Security, whichever comes first.
• Employment Type: The individual must be employed, not self-employed, with some exceptions. For instance, some freelancers with a digital nomad visa or highly qualified professionals providing services to startups may be eligible.
• Company Ownership: If the individual is a company director, they must own less than 25% of the company’s shares unless they qualify under a startup or entrepreneur scheme.
• Exclusions: Professional athletes are no longer eligible for the Beckham Law.

Important Considerations

• It is an elective regime: The Beckham Law is not automatically applied. Eligible individuals must formally apply for it.
• Loss of deductions: Individuals under this regime are not eligible for the standard personal and family tax deductions available to regular Spanish residents. For this reason, it may not be beneficial for lower earners.
• Family members: A spouse and children under 25 (or disabled children of any age) can also be included in the regime if they move to Spain with the applicant in the first year of the application.