The Beckham Law is a special tax regime for foreign people who move to Spain to work was nicknamed after David Beckham. He was one of the first people to take advantage of the special tax regime while playing for Real Madrid in 2003. As a result, he saved approximately half of his income taxes. The regime aims to attract highly valued employees to work in Spain.
Beckham Law: Reduction of income tax for high salaries
The Beckham Law (Royal Decree 687/2005) offers you the option to choose whether to be taxed as a tax resident or non-tax resident during the tax year when you arrive to Spain, as well as for the following five years. Tax residents pay the income tax based on a progressive scale that goes up to approximately 50%, and non-tax residents pay the income tax based on a flat rate of 24%. This means, that if you have a low salary, you pay less as a tax resident. If your gross salary is more than xx euros / year, you pay less as a non-tax resident (i.e. the Beckham law is a great tax planning tool for you).
Another advantage of the Beckham Law is that the wealth tax that still exists in some parts of Spain will not be applied to the assets you have outside of Spain, if you choose to be non-tax resident based on the Beckham law. Additionally, you are not required to fill out the Modelo 720 form, which means you are not required to inform the Spanish tax authorities about any assets located outside of Spain.
The main three requirements to obtain the Beckham Law status and remain a non-resident are the following:
- You have not been a resident in Spain during the past 10 years.
- You come to Spain to work in a Spanish company, where you or your family members do not own for more than 25% in total.
- You apply for the regime no more than 6 months after your work contract is officially registered.
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