The Beckham Law: the tax system for foreigners who move their residence to Spain
The Beckham law (Real Decreto 687/2005, de 10 de junio, which amended art.93 of Ley 35/2006) provides for a special individual tax regime for foreigners who move to Spanish territory for work reasons, and these will be able to apply it for the 5 years following the change of residence. It is an advantageous system aimed at attracting skilled workers to Spain, and owes its name to the famous football player, who was the first to benefit from it (although to date the aforementioned rule does not apply to professional sportsmen). In essence, this tax regime for expats allows you to pay much lower taxes and save huge amounts of money. It allows all workers residing abroad who want to go to work in Spain to pay their wealth and income taxes as if they were non-resident during the first six years.
This special regime can be applied to natural persons who meet the following requirements: 1. They have not been resident in Spain in the ten tax periods preceding the one in which they moved to Spanish territory.
2. The transfer to Spanish territory must be linked to one of the following circumstances:
- For the start of an employment relationship or a secondment ordered by the employer
- being the director of a company, without however being a partner or shareholder (or if the participation does not determine the condition of a restricted entity)
3. Who do not obtain income through a permanent establishment located in Spain.
Therefore, neither pensioners nor self-employed workers are included.
Under this system, those who opt for The Beckam Law consider themselves NON-RESIDENT at a tax level, although they really would be as they work for more than 183 days a year in Spain (and in any case, under the Conventions against Double Taxation signed with the different countries, would be considered tax residents in Spain), and will have to pay taxes exclusively for the income obtained in Spain as if they did not actually work there.
To understand the tax advantage that it entails, it is necessary to know that the rate of the Income Tax of natural Persons in Spain is between 19% up to 45%, according to income.
Instead, with the application of this tax regime, the aforementioned workers who are located in Spain will pay a fixed rate of 24% for income obtained in Spain up to € 600,000, while for higher incomes the rate is 47%. .
A practical example: A qualified professional aged around 50 has a salary of € 80,000.00 per year. As a resident, the IRPF would amount to approximately 29%, or € 23,400 / year. By opting for this tax regime, however, 24%, and in this way the savings would be € 4,000 / year.
With regard to savings income (e.g. dividends, interest, added values, etc ...), the following scales apply:
Tax base from(€) Tax Base to (€) Rate (%)
0 6000,00 19
6.000,00 44.000,00 21
50.000,00 150.000,00 23
200.000,00 - 26
Finally, being considered legally as NON-RESIDENT, the subject will not have to declare all world income.
Therefore, it is advisable for professionals who go to work in Spain to contact an expert in tax law or an accountant on the spot who can evaluate the most convenient tax regime, since in some cases the Beckham Law can be advantageous.
Abogada Eugenia Ravagnan Venezze
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