The Beckham law is not really a law, it is just an article about income tax law in Spain. The name comes from the famous English footballer, David Beckham when he came to play at Real Madrid. The idea of this was not only to bring football stars to Spain but to make their taxes cheaper.
What are the requirements?
- You should not have been a Spanish Tax Resident in Spain during the last 5 years (before was 10 years but Startup law changed)
- You should become Spanish Tax Resident
- The reason why you come to Spain is because of work. You need to prove this with the work contract of your company.
- Your wife, husband or children under 25 years of age can also benefit from the system.
What are the advantages of this?
- Your income tax rate will be 24% up to 600.000 € and 45% if you earn more than that. Bear in mind, the tax rate for a tax resident is 46% for more than 60.000 € per year, so the saving is massive. Capital gains on dividends, interest, etc. are the same like the rest, from 19% to 23%.
- You only pay taxes for your income in Spain unless you have income from work in another country. Those are included. For instance, if you work part time for a company in Spain and another teleworking for a British one, you pay taxes for it in Spain. However, you can apply for the double taxation treaty.
- You will only declare your assets in Spain on the Wealth tax. You don’t include the one abroad.
- You don’t have to submit the Model 720.
Are there disadvantages?
- You can’t apply for tax deductions but we can admit the saving is more than the possible tax deductions.
- It is worth when your salary is more than 50.000 € and taking into consideration only salaries. Otherwise, you can pay less on the income tax.
- This is for workers, not for investors or pensioners.
What is the process?
- You have 6 months from the start date of your contract to inform Tax Agency you want to apply for this system and provide the required documents.
- It should be confirmed within 10 days. Once this is done, you will have the year you applied + 5 years more to keep in it.
- If you get denied, then you have to pay your taxes on the income tax by the regular rates.
- Each year you should submit your tax return (modelo 151) which is different from the one for Spanish tax residents. The PAYE on your salary will be 24% so it is likely you don’t pay anything on this tax form.
- When you return to your country or go to another, you should inform the Tax Agency that you are leaving. You should do this between November – December.
What’s new on 2023?
Startup law allows digital nomads to become residents in Spain if they telework 100% for a company which is not based in Spain and apply for the Beckham’s law. So you can decide to come to Spain, buy your property and telework seeing the sea from your windows and paying less taxes. Also, you can get your residencia easily with this because there are VISAS for digital nomads.