Why apply for the Beckham Law in Spain and how much does it cost?
Spain is emerging as a key destination for international professionals and businesses thanks to the Beckham Law, a special tax regime that offers significant advantages for foreign workers and expatriates. This legislation allows reduced tax rate on income generated within the country, thus promoting a more accessible and attractive environment for investment and tax residency.
At Nomad Tax, we specialize in maximizing the benefits of the Beckham law for our clients. Our expertise ranges from personalized advice to the comprehensive management of the procedures necessary to establish your tax residence in Spain, ensuring that you take advantage of the fiscal and strategic opportunities that this country offers. With our help, you can enjoy a favorable tax system in a vibrant environment with access to European and global markets.
Do you know the tax benefits of Beckham Law in Spain?
Why is Spain not an attractive country for businessmen and entrepreneurs?
Spain, a southern European nation, extends over the Iberian Peninsula, bordered to the north by France and Andorra, to the west by Portugal, to the south by the British territory of Gibraltar and to the east by the Mediterranean Sea. This country, with a rich history that dates back millennia, has been a crossroads of cultures since ancient times.
The independence of its autonomous communities, together with its capital, Madrid, located in the heart of the country, reflects the cultural and linguistic diversity that characterizes Spain. With a surface area of approximately 505,990 km², Spain ranks as the fourth largest country in Europe, compared in size with countries such as France or Ukraine.
The Spanish population exceeds 47 million inhabitants, with an almost universal literacy rate. Madrid, Barcelona, Valencia, and Seville are among its most populated cities, being centers of economic, cultural and political activity.
However, despite its cultural and geographical wealth, ranging from the beaches of the Mediterranean to the mountains of the Pyrenees and its recognized historical and artistic legacy,Spain faces significant challenges that affect business and entrepreneurship.
Taxation is Spain's main challenge.
Aggressive taxation, with one of the highest tax rates in Europe, coupled with complex bureaucracy and regulations, creates an environment that hinders entrepreneurship. The rigidities of the labor market, limited access to financing as well economic and political uncertainty complement this picture, motivating businessmen and entrepreneurs to seek more promising horizons outside of Spain.
Some economic indicators for Spain include:
Spain has a GDP per capita of more than US$30,000, which places it in an intermediate position within the European Union.
With a population of more than 47 million, Spain has a sizeable domestic market, providing a solid base for business growth and innovation.
Spain is one of the countries with the best infrastructure in Europe, including a well-designed road network, high-speed railroads, efficient ports and airports.
Can Spain be a tax haven with the Beckham Law?
Just as Portugal had the NHR and Cyprus has the Non-Dom, Spain has a special tax regime called “Beckham Law”.
Under this regulation any individual who has not been a tax resident in Spain during the last 5 years can apply for a special tax treatment.
It is important to note that the concession is not automatic. Furthermore, complying with the established criteria and requirements does not automatically guarantee beneficial tax treatment.
A separate application must be made within the first 6 months after registration with social security. If this is not done within this period, the right to claim any tax benefits under the Beckham Law is automatically lost.
Is it worth applying for the Beckham law in Spain?
If you are considering relocating to Spain and wondering if it is worth applying to Beckham Law, let me tell you. The Beckham Law, officially known as the special regime for posted workers, offers a series of tax advantages that can be very attractive depending on your personal and professional situation.
Some of the Key Tax benefits of the Beckham Law in Spain are:
- Income Taxes: You will not pay IRPF (Personal Income Tax), but Non-Resident Income Tax, which can considerably reduce your tax burden.
- Inheritance and Gift Tax: This is also favorably affected under the Beckham Law.
- Capital Gains: Also subject to Beckham Law. Any capital gain sourced from outside of Spain is tax free.
When is the Beckham Law beneficial in Spain?
It is crucial to understand that although you will not pay tax in Spain on income generated abroad, these earnings may still be subject to tax in another country. The Beckham Law is particularly beneficial if you can combine it with the tax legislation of countries with low capital gains tax rates, such as Cyprus.
The Beckham Law is particularly advantageous if:
- You obtain significant income from abroad that will not be taxed in Spain.
- You can benefit from a reduced tax rate of 24% instead of 47% on your income, but remember to consider social contributions.
- You are exempted from declaring assets abroad through Form 720.
Social contributions when applying to the Beckham Law in Spain
Although you may enjoy a reduced tax rate, don’t forget that you will pay social contributions, which can add up to 14,000 euros per year, depending on your situation.
What services does Nomad Tax offer in relation to the Beckham Law in Spain?
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Non-Resident Special Regime Application (does not include analysis) |
399 € |
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Client's Tax Planning, including the application |
1750 € |
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Tax consulting (maximum 1h) |
399 € |
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Questions about the Beckham Law in Spain
The Beckham Law, or special regime for displaced workers, allows certain expatriates to enjoy tax advantages in Spain. Newcomers to Spain, expatriates with significant income, people working remotely from Spain, highly qualified professionals, business managers, and family members of teleworkers can apply. It is important to note that self-employed workers, professional athletes and company directors are not eligible for this regime.
The main benefits include a fixed tax rate of 24% on income generated in Spain for the first 6 years, not being subject to Personal Income Tax but to Non-Resident Income Tax, and favorable conditions regarding Inheritance and Gift Tax and Capital Gains Tax. In addition, no tax is paid on income obtained abroad and there is no need to declare assets outside Spain through Form 720.
To apply, it is necessary not to have been a tax resident in Spain during the last 5 years. The application must be made within the first 6 months after registering with the Spanish social security. Failure to do so within this period implies losing the right to claim any tax benefits.
It is particularly advantageous if you generate significant income from abroad that will not be taxed in Spain, you can benefit from a reduction in the tax rate of your income in Spain, and you value the exemption of declaring assets abroad. It is crucial to consider social contributions, which can add up to 14,000 euros per year.
