The Beckham Law in Spain Explained

The special tax regime known as Beckham Law, states that individuals who acquire their tax residence in Spain will be able to opt for taxation under the regulations for non tax residents during their first 6 years of tax residence in Spain (Even though they are considered residents).

This means that only income obtained in Spanish territory is taxed, with the peculiarity that all work income obtained by the taxpayer from the date of his arrival in Spain until the date of notification of his departure is subject to taxation. The applicable tax rate is 24% on the first 600,000 euros and 45% on income exceeding that limit.

In this article we will review every characteristic concerning Beckham Law. 

Beckham Law spain 2020

Royal Decree 687/2005 is called the Beckham Law. This decree is a modification of the rewritten text of the Income Tax Law, in force between 2005 and 2007 and integrated in the decree 439/2007 still in force. It allows foreigners who move to Spain to work tax as non-residents. This means paying taxes at the fixed general rate of 19.5% after decree 9/2015.45 Bearing in mind that the maximum rate in Spain is 45% (article 101), this law primarily benefits very high incomes. Footballer David Beckham was one of the first to take advantage of the measure, which led to the law being popularly renamed the “Beckham Law”.

who can take advantage of the beckham law

You can only benefit from the Beckham Law if you have not been a tax resident in Spain during the 10 years prior to your migration to Spain and provided that your migration is the result of an employment contract with an employer in Spain, or in the event that your employer sends you to Spain.

Beckham Law will also apply if you become a director in a Spanish company, as long as you do not have a stake in the company, or your stake is less than 25%.

Taxation in Spain will be exclusively for income obtained in Spanish territory, including in any case work income obtained in any territory. By way of example, if the amount of earned income obtained in the financial year is equal to €250,000, taxation in Spain according to the autonomous community will be between 45% and 48%, however, with the special regime, taxation will be reduced to 24%.

It is therefore obvious that the application of the previous regime may be of great relevance.

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