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Special tax regime for impatriates (Beckham Law): Requirements for its application

It is known as the Beckham Law because of the soccer player who was able to apply it and benefit from the tax reduction that this regime entails, but currently professional players are excluded from the possibility of applying this regime. 

Let’s see a summary of who can apply the special regime, which basically consists of paying tax at a fixed rate of 24% on income from work for the first 600.000 euros, as if you were a non-resident, but being a tax resident in Spain. For the excess of 600.000 euros you would be taxed at 45%. 

This special regime can be applied by those individuals who meet the following requirements: 

  1. That they have not been resident in Spain during the ten tax periods prior to the one in which their movement to Spanish territory takes place.
  2. That the move to Spanish territory takes place as a consequence of any of the following circumstances:
    1. As a consequence of an employment contract (except for professional sportsmen and sportswomen).
    2. As a consequence of the acquisition of the condition of administrator of an entity in whose capital it does not participate or, otherwise, when the participation in the same one does not determine the consideration of related entity.
  3. Who does not obtain income through a permanent establishment located in Spain.  

If these requirements are met, you may voluntarily choose to apply this special regime, in which case you will be subject to Spanish Wealth Tax by real obligation. 

This application of the special regime entails the following specialties, as follows: 

  1. You must pay tax on your worldwide income in Spain, but beware, this can be good if in another country the percentage is higher than the one you have to pay here (24%).
  2. You cannot compensate incomes between them, that is to say, you cannot compensate losses with profits.
  3. Capital gains are taxed as the rest of residents, that is, 19% for the first 6.000 euros, 21% up to 50.000 euros and 23% for the excess of 50.000 euros 
Important note: despite being taxed as a non-resident, the deduction of the 300.000 euros of the main residence is allowed for Wealth Tax purposes.

· How do I apply for inclusion in the special regime? 

The application is simple, a form 030 must be filled out for registration with the Treasury as a foreigner, after requesting a NIE (Foreigner Identification Number) at the police station, and then a form 149 must be completed.  

· How long do I have to apply for inclusion in the special regime? 

The deadline for submitting the application is 6 months from the date of registration with the Social Security or from the modification in the social security of the country of origin, for which form 1 is always required, which is a standardized form at the European Union level. 

· For how long can I apply this special regime for impatriates? 

The regime can be applied during the fiscal year in which it is requested and the following 5 tax periods. During these periods, form 150 or 151 must be filed within the same deadlines as the income tax return, this form number is the one that corresponds to form 100 for normal residents. 

· Can I renounce the special regime? 

Yes, it is possible to resign during the months of November and December of each year with effect for the following year. In order to renounce, a communication must be presented to the withholder (payer company) and this company must stamp it. Afterwards, the same is presented to the Tax Agency. 

Important note: if this regime is renounced, it is not possible to opt for its application again

· What influence does it have on Inheritance and Gift Tax? 

This detail is important, if during this time of application of the special regime you become heir of an inheritance, you will have to declare the inheritance as resident in the autonomous community where you reside, paying tax accordingly. 

This special regime is very attractive to apply, especially when the percentage of the income without applying it exceeds 24%. It is usually applied by executives of companies that come to work in Spain, normally as displaced persons, and it is also applicable to large patrimonies that intend to move to Spain coming from some other country with higher taxation. 

We recommend a detailed study of the possibility of application of this regime in each individual case, since the casuistry is very varied. 

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