Beckham Law Spain: A guide to tax benefits for expats
Spain has long been a magnet for international professionals, investors, and digital nomads. One of its most attractive incentives is the Beckham Law Spain, a special tax regime designed to make relocating more financially appealing.
Named after the famous footballer David Beckham, who was among the first to benefit from it, this law offers significant tax advantages for qualifying foreign workers moving to Spain.
If you’re considering working or investing in Spain, understanding the Beckham Law could save you thousands in taxes.
What is the Beckham Law?
The Beckham Law is a special tax regime introduced in Spain in 2005 to attract foreign talent and investment.
Officially known as the Special Tax Regime for Workers Relocated to Spain, it allows qualifying individuals to pay a reduced flat tax rate on their Spanish income, rather than being taxed at the higher progressive rates that residents normally face.
The name Beckham Law comes from the English football star David Beckham, who famously moved to Spain to play for Real Madrid shortly after the law was introduced, making it widely known internationally.
Who is qualified for the Beckham Law?
To qualify for the Beckham Law, several conditions must be met:
- Residency requirements: The individual must become a tax resident in Spain, which generally means spending more than 183 days in the country during the calendar year.
- Employment contract specifics: The law applies to individuals who move to Spain as a result of an employment contract with a Spanish employer or as a result of being transferred within a multinational company to a Spanish branch.
- Digital nomads eligibility: Recent adaptations have broadened eligibility, allowing certain digital nomads and remote workers with contracts from foreign companies to qualify, provided they meet residency and employment conditions.
Also read - Digital nomad taxes: What you need to know
Tax benefits of Beckham Law
Under the Beckham Law, qualifying individuals enjoy a flat tax rate of 24% on employment income up to €600,000 per year. Income above this threshold is taxed at 47%, which is still lower than the top marginal rates under the regular tax regime.
One of the biggest advantages is the exemption from taxation on foreign-sourced income, which means that income earned outside Spain generally isn’t taxed by Spanish authorities during the Beckham Law period.
The special tax regime lasts for up to six years – the year of arrival plus the following five calendar years – after which individuals revert to the standard Spanish tax system.
How to apply for the Beckham Law
To apply for the Beckham Law, you must notify the Spanish tax authorities within six months of starting your employment in Spain. The process involves submitting Form 151, along with supporting documentation such as your employment contract and proof of relocation.
Applications are typically handled by tax advisors or accountants familiar with Spanish tax law, given the nuances and deadlines involved. Timely application is critical to ensure eligibility and to avoid defaulting to the standard tax regime.
Reporting obligations under the Beckham Law
Even under the Beckham Law, taxpayers must comply with Spain’s asset reporting requirements. This includes filing Modelo 720 if you hold foreign assets exceeding €50,000 in categories such as bank accounts, investments, or real estate.
The Beckham Law does not exempt you from wealth tax obligations in Spain. You must continue to report and potentially pay wealth tax based on your global assets, subject to regional variations.
Other tax filings, such as VAT or local taxes, remain unaffected by the Beckham Law, so it’s essential to maintain full compliance with all Spanish tax regulations.
How does the Beckham Law interact with US tax liabilities?
For US citizens, the Beckham Law offers tax relief in Spain, but US tax obligations remain. The US taxes its citizens on worldwide income, so you’ll still need to file US tax returns annually.
The Foreign Tax Credit (FTC) and Foreign Earned Income Exclusion (FEIE) can help reduce double taxation, but coordinating Spanish Beckham Law benefits with US tax filings can be complex.
Working with a tax expert familiar with both US and Spanish tax systems is vital to optimize tax savings and ensure compliance on both sides.
Conclusion
The Beckham Law Spain presents an excellent opportunity for eligible foreign workers to enjoy significant tax savings during their initial years in Spain. With benefits like a flat tax rate and exemption of foreign income, it’s especially attractive for high earners relocating for employment or digital nomads meeting residency rules.
If you think you qualify, consulting a tax professional early can help you navigate the application process smoothly and maximize your benefits.
FAQ
No, the Beckham Law generally applies only to employees with Spanish employment contracts or intra-company transfers.
Income over €600,000 is taxed at 47%, still lower than standard rates, but the flat 24% rate applies only up to that limit.
No, the law mainly applies to employment income; capital gains and dividends are typically taxed under normal rules.
Yes, you may opt out but should consult a tax advisor to understand implications and deadlines.
