The Beckham Law in Spain

If you’re thinking of making the move to Spain to work there, you’ve probably researched where to live, visas, the cost of settling there and taxes.

Chances are you’ve come across the Beckham Law. If you’ve wondered what it is and how it might impact you, then read on. This guide will tell you what you need to know about how the Beckham Law works in Spain.

What is the Beckham Law?

The Beckham Law in Spain is a tax exemption for foreign workers, designed to attract highly qualified foreign workers to Spain. The idea is it will help improve competitiveness and provide Spanish businesses with more experience and talent.

Officially known as the Special Regime for Displaced Workers, it’s colloquially referred to as the Beckham Law or Beckham Rule. This is because David Beckham was one of the first foreigners to benefit from the law when he moved to Madrid. Recent charges to the law mean that sportspeople are no longer eligible, but people still know it as the Beckham Law.

The aim of the law is to incentivise skilled foreign workers to move to Spain, with the promise of a reduced, flat tax rate on their income. It also only applies to income they earn in Spain.

If eligible, you would pay a rate of 24% income tax on Spanish-sourced earnings up to €600,000 each year, instead of the progressive rate that tax residents pay.

How does The Beckham Law work?

Usually in Spain you’re considered a tax resident if you live there for 183 days in the year.

Essentially, if you’re eligible for the Beckham Law then you pay less tax because you’re considered a non-resident in Spain for tax purposes. You also won’t have to pay Spanish taxes on worldwide income, which can simplify things for people with complex tax obligations.

The exemption lasts for a maximum of six years. This is made up of the year you move to Spain and the five full tax years that follow. The Spanish fiscal year follows the calendar year.

After that period, you’ll be required to pay the normal progressive resident tax rates and pay tax on worldwide income.

While you’re eligible for the Beckham Law, anything you earn over €600,000 each year will be taxed at 47%.

Eligibility for the Beckham Law exemption

To be eligible for this exemption you’ll need to fulfil the following criteria:

• You can’t have lived as a tax resident in Spain in the five years before applying. Previously this was 10 years.
• You need to be moving to Spain for work. This means you need to have a job offer at a Spanish company, work there for a foreign company, be a company director who owns less than 25% of shares in the company or hold a Spanish digital nomad visa (in some cases). If you’re starting a business in Spain and have an entrepreneur visa you might be eligible as well.
• You can only do a maximum of 15% of your work abroad, so your main job must be based in Spain.

Your spouse, children and eligible dependants will also benefit from this regime providing they move to Spain with you in the year you apply.

While it’s still unofficially referred to as the Beckham Law, professional athletes are no longer able to apply for the exemption.

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How to apply for the Beckham Law

You need to apply within six months of registering with the Spanish social security system or arriving in Spain, whichever comes first.

When you move to Spain you’re required to apply for a NIE, which is a tax ID for foreigners. You’ll need this number to apply for the Beckham Law exemption.

Along with proof of your registration in the Spanish social security system and NIE, you’ll also need a photo ID, a copy of your employment contract and proof of your tax residency in another country for the last five years.

For those considering the move to Spain, the Beckham Law can be handy tax incentive to make that decision and make that move a reality.

It’s always a good idea to consult with a tax expert before you apply to fully understand how this tax regime would impact you personally. While this guide is a general overview, a tax expert can help you understand exactly what it means for you.