What is the Special Tax Regime in Spain?

non resident tax Spain

Maybe you have heard of Beckham’s Law before – a special Spanish tax law that was initially created for the benefit of the international footballer during his Real Madrid days.

Spain introduced and expanded this regime to promote more highly qualified professionals coming to work in the country, improving industry competitiveness and internationalisation.

If you are a foreigner moving to Spain for work, this law could help you to pay less tax in Spain.

Here is a guide to the Special Regime for Displaced Workers in Spain explaining the advantages, who is eligible, and how to apply for the scheme.


What is Beckham’s Law?

Known as the Régimen Especial para Trabajadores Desplazados in Spanish, and as Beckham’s Law informally in English, the Special Regime for Displaced Workers is a tax regime for foreigners who move to Spain for an employment offer.

This regime is advantageous to the Spanish economy because it attracts international talent, while also being beneficial to expats who can pay lower taxes while living in Spain for a job.

Fun fact: while the law is still colloquially tied to Beckham, who was one of the first expats to take advantage of it, sports professionals and athletes are no longer eligible for the regime.

The purpose of the regime is to allow expats to maintain a non-resident status for up to 5 years, allowing them to pay tax as if they were a non-tax resident in Spain.


Who is eligible for the Special Regime for Displaced Workers?

Anyone of any nationality outside of Spain could apply for this tax scheme, as long as they meet the eligibility criteria below.

Firstly, you cannot have lived in Spain as a tax resident in the previous 5 tax years. This has been reduced from the former restriction of 10 years.

Secondly, you must be moving to Spain – or being ‘displaced’ to Spanish territory – as a result of an employment contract.

You must receive a job offer before entering Spain, be transferred from a foreign international company to a post in Spain, or become a director of a company in Spain (owning only 25% or less of shares).

Thirdly, all of your employment responsibilities must be performed in Spain, with no more than 15% of working activity performed abroad. Additionally, income must come from a Spanish company, not a non-resident ‘permanent establishment’.

Last but not least, you must apply for the regime within 6 months of the contracted employment relationship starting, though repatriation can take place the previous or following tax year from the time of application.

Freelancers and self-employed workers cannot apply unless they hold a valid Digital Nomad Visa, and directors who own 25% of a company located in Spain cannot apply unless they have a Start-up/Entrepreneur Visa.

As mentioned above, professional athletes and sportspeople are unfortunately no longer eligible.

During the 5–6 years of the regime, if the taxpayer ceases to fulfil the eligibility criteria, the Spanish tax agency may exclude them from the scheme, after which they cannot re-apply.


What are the benefits of Beckham’s Law?

If you live and work in Spain for more than 183 days a year, you automatically become a tax resident. This means you will be charged the same Impuesto sobre la Renta de las Personas Físicas (IRPF) rates as a Spanish national for income tax.

These progressive tax rates for residents can be as high as 48%, applying to global income, but the Special Regime allows successful applicants to be counted as non-residents for tax purposes.

Expats in the scheme would therefore be able to pay a fixed lower rate for its duration, paying 24% on income up to 600,000€ earned within Spain. Anything above this would be taxed at 45%.

Those in the regime won’t have to pay progressive tax rates or pay tax on worldwide income, only being taxed on their domestic income in Spain at the fixed non-resident tax rate.

These tax conditions will apply for up to 6 years – the five tax periods included in the scheme, plus the year of application.

As with other special schemes, the applicant can also bring their spouse, dependent children under 25 years old, an elderly parent, or a disabled family member of any age – provided they are ‘displaced’ along with the taxpayer and move to Spain within the first year.


When is it worth applying for the Special Regime?

Effectively becoming a non-resident for tax in Spain is beneficial for higher earners, who would otherwise have to pay a much larger amount of tax on earnings up to 600,000€.

The scheme can also help to minimise the tax burden for capital gains or inherited assets outside of Spain, as taxpayers are only liable for their income within the country.

Whether Beckham’s Law is worth it or not depends on the personal and economic circumstances of the applicant.

Tax rates can vary from region to region in Spain, so lower earners may find it simpler to stick with the standard rates.

If you apply for the scheme then decide it isn’t worth it after all, you can waive your application – but this will only be enforced from the start of the next year, and you wouldn’t be able to apply for the regime again after leaving.


Need help with non-resident tax in Spain?

To apply for the Special Regime for Displaced Workers in Spain, you must complete Modelo 030 and submit it to the Spanish tax agency to receive a foreigner’s tax identification number (NIE).

Once registered with the tax authorities, you must complete and submit Modelo 149, including your identity documents and evidence of eligible employment in Spain with your application.

If approved, you should receive a certificate that you can give to your employer for tax rate deductions – it can take anywhere from 10 days to 1–2 months to complete this process.

You must then file an income tax return in Spain using Modelo 150 each year to make a special tax declaration.

This has been a basic summary of what the Special Regime could offer you and how to apply. If you have any queries about your eligibility or non-resident tax in Spain, you can contact Manzanares Lawyers.

Our team of Spanish and English-speaking lawyers in Spain could evaluate your position and assist with your application for a suitable visa. To arrange a consultation, call us at one of our three offices or email us today.


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