The Ley Beckham or Beckham Law (formally Special Regime for Workers posted to Spanish Territory in the Law of IRPF – the Spanish income tax), is a special tax regime that offers a better taxation for those who move their residence to Spain due to a job. The name “Ley Beckham” comes from the fact that the famous soccer player David Beckham was one of the first people to benefit from this law.
Normally, under Spanish tax law, individuals who spend 183 days or more in a tax year in Spain are considered tax residents. The Royal Decree 687/2005 is an amendment to the law, specifically made to attract wealthy foreign workers like David Beckham and top executives by modifying the definition of tax residency for this specific group. This amendment eases the tax burden for those individuals and makes it more attractive for them to move to Spain.
The main benefits of the Beckham Law
One of the main benefits of the Ley Beckham is that salaries are taxed at a fixed rate of 24% up to €600,000 (then it becomes 47% starting from this amount), and only income obtained in Spain is taxed (with the exception of salaries). Under the normal regime, all worldwide income would be subject to tax in Spain, and higher rents may be taxed higher than 47%.
The normal IRPF tax brackets go progressively from 19% to 47%:
- First bracket up to 12,450 euros in which a 19% is paid.
- Second bracket up to 20,200 euros with a rate of 24%.
- Third bracket up to 35,200 euros with a 30%.
- Fourth bracket up to 60,000 euros with a 37%.
- Fifth bracket up to 300,000 euros with a 45%.
- Sixth bracket over 300,000 euros of 47%.
Note: It’s important to mention that these are the Spanish Income Tax (IRPF) brackets and percentages that were in force for the tax year of 2022. However, it could change in the future. Check our article Spanish tax residents: An expert’s guide to filing taxes in Spain (Updated November 2022)
Dividends, interests, and capital gains will be taxed at a rate that ranges between 19% and 23%
Additionally, the Wealth Tax, which is a tax applied to the net value of the taxpayer’s assets globally, is only taxed for assets located in Spain under the Beckham Law. This means that if you take advantage of this law, you would only have to pay taxes on the value of your assets located in Spain, which can be an important consideration for those who have assets in other countries. Notice that Wealth tax varies in each Comunidad Autónoma. In Madrid or Andalucía, for example, it is fully reduced to 0%, but in Cataluña and Valencia it may reach 2.5% and 3.5% respectively of your declared net worth.
Another advantage of the Beckham Law is that taxpayers are treated as if they were non-residents for tax purposes. This means that there is no obligation to present the Model 720, which is a declaration of assets abroad. This can make the tax process for those who take advantage of this law much more straightforward and less burdensome.
Last but not least, the sale of assets or dividends abroad will not be taxed in Spain (something that foreigners who do not benefit from the Beckham Law must pay through capital gains tax).
And, profits derived from the sale of assets in Spanish territory will be taxed at a fixed rate of 19%.
The requirements of the Beckham Law
To apply for the Ley Beckham, certain requirements must be met. The person must not have been a tax resident in Spain for the last 5 years (the requirement used to be 10 years until Jan 1 2023) and must have a new job that justifies the move to Spain. Additionally, the person cannot obtain income through a permanent establishment located in Spanish territory, which basically means that the applicant cannot have a self-employed activity, such as freelancing, and that the hiring company must be Spanish.
All responsibilities and work tasks must be carried out in Spain. If some of these are performed outside, they cannot represent more than 15% of the total activity of the worker.
It’s important to note that the Ley Beckham is an optional regime and the Tax Agency will have to approve the application, which must be submitted with the necessary documentation. Additionally, it’s important to meet certain deadlines, such as the deadline to move to Spain, to start work, and to apply for the scheme. In this sense, there must be a causal relationship between the start of the employment/administrator relationship and the move to Spain.
The documents must be properly submitted so that the Tax Agency accepts the request, because in case of rejection, it will not be possible to be resubmitted.
What is the deadline for applying for the Beckham Law?
In general, the deadline is 6 months from the start of the employment in Spain.
Documentation needed and timings
The taxpayer who wants to opt for the Beckham Law must have submitted the 030 model and then present the 149 model along with a company declaration. Later in the process, he will need to submit Passport (complete), NIE (foreigner identification number), employment contract and social security number. According to the regulations, the Tax Administration has a deadline of 10 days from the receipt of the application. However, in practice it usually takes 1-2 months.
How long can one benefit from this special tax regime?
If approved, the regime will apply for 6 years (or 5 years plus the current year of application and approval by the tax authorities), although it can also be canceled before.
Disadvantages of the Beckham Law
As with any tax regime, there are advantages and disadvantages to the Ley Beckham. One of the main disadvantages is that taxpayers who take advantage of this regime will not be able to apply most of the double taxation agreements and Social Security expenses deductions are limited.
Also, the person who opts for this regime will not have the right to the exemption of severance pay. As a general rule, the severance pay received by the worker is exempt from taxation.
Similarly, they will also not have the right to the deduction for minimum of descendants or family. The “deducción por mínimo de descendientes o familiares” is a tax deduction provided under Spanish tax law for individuals who have dependent children or relatives.
This deduction is a mechanism to reduce the tax burden of individuals who are taking care of dependent family members and it can be applied for each dependent person you have in a tax year. The amount of the deduction will depend on the number of dependent children or relatives, and their respective incomes.
Are there other countries with similar exemptions?
There are several countries in Europe with a similar special regime, such as Portugal, the United Kingdom, or Switzerland.
Conclusion
The Ley Beckham, also known as the Special Regime for Workers posted to Spanish Territory in the Law of IRPF, is a special tax regime that can be very advantageous for those who meet the requirements and are moving to Spain due to a job. It can be a powerful tool to attract qualified workers to Spain and offers better taxation for those who meet the requirements. However, it’s important to consider the disadvantages, such as double taxation and limited expense deductions.
Depending on the economic and personal circumstances of each person, it can be indicated for informational purposes that this special regime is more favorable than the general regime starting from an annual gross salary of approximately 60,000 € and if only income from work is taken into account.
If you’re thinking of moving to Spain for a job, the Ley Beckham can offer significant tax benefits, but be sure to consult with a tax advisor to ensure you meet the requirements and to find out if it’s the best option for you.
This article is not legal nor financial advice. If you need tax experts, make sure to arrange a consultation with Spainguru’s recommended tax advisors here.
The following table/chart is presented solely for the purpose of illustration, depicting annual earnings with and without the application of the Beckham Law.
| Taxable income | Yearly earnings without Beckham Law | Yearly earnings with Beckham Law | Difference |
| €10,000 | €8,221 | €7,752 | -€468 |
| €20,000 | €16,127 | €15,505 | -€623 |
| €30,000 | €23,406 | €23,257 | -€149 |
| €40,000 | €30,438 | €31,010 | €572 |
| €50,000 | €36,973 | €38,762 | €1,789 |
| €60,000 | €43,429 | €46,463 | €3,034 |
| €70,000 | €49,217 | €54,063 | €4,847 |
| €80,000 | €54,717 | €61,663 | €6,947 |
| €90,000 | €60,217 | €69,263 | €9,047 |
| €100,000 | €65,717 | €76,863 | €11,147 |
