Author: Miriam Sánchez.
Foreign workers can benefit from a regime specially designed for them that limits the taxation of their salaries to 24% and excludes from taxation (in Spain) other income obtained abroad. It is commonly known as the Beckham regime as it came into force in Spain when the well-known sportsman arrived in our country.
The Beckham regime is not very well known, but it is particularly interesting for Expats posted to Spain by multinationals, many of them in the IT sector, especially if they can receive bonuses during the years of their stay in Spain.
The Beckham regime is beneficial when the salary package exceeds 48,000 euros gross per year for single workers with no dependent children and limits taxation to 24% up to 600,000 euros per year.
Married workers with minor children enjoy certain deductions in the usual regime, so for them the regime starts to be beneficial for higher salary packages. For a married worker with two dependent minor children, the regime starts to be beneficial from 59,000 euros gross per year.
What are the requirements to be eligible for this regime, the following:
- Not to be a tax resident in Spain and not to have been so in the last 5 years.
- Be subject to an employment contract, digital nomad, entrepreneur or highly qualified professional.
- Apply within 6 months of starting to reside in Spain.
The regime will be applicable in the tax year in which it is requested and in the following 5 years, for which reason it is also necessary to consider future income, bonuses or extraordinary bonuses that are expected to be received in the following 5 years.
To obtain the benefits it is necessary to request it in writing, before 6 months have passed since you established your residence in Spain. The approval takes between 6 and 8 weeks and the benefits are applied only after receiving a written authorization from the tax authorities.
Workers opting for the Beckham regime will enjoy the following benefits:
- Salaries will be taxed at 24% up to 600.000.-€ gross per year, above that amount the tax rate will be 47%.
- Profits that are not salaries and are obtained outside Spain will not be taxed in Spain.
- It is not compulsory to file Form 720, which obliges other foreign workers to declare the assets they own in their countries of origin.
- Wealth Tax in Spain is limited to assets located in Spain exceeding a certain value (e.g. real estate located in Spain with a value of more than 2,000,000 Euros).
The regime also applies to other family members, the legally married spouse and children under 25 years of age, provided that they move to Spain at the same time as the worker or in their first year of residence in Spain and similarly meet the requirement of not having been tax residents in Spain during the last 5 years.
We have prepared a Question and Answer Guide that you may find useful.
