Beckham law is a special reduced tax regime that benefits high-earning expats who move to Spain. It allows them to pay a fixed rate of 24% on their income as non-residents for the first six years of their stay. This is much lower than the progressive rates that apply to residents (up to 45%) and it can significantly reduce the amount of taxes an individual pays in Spain. However, it’s important to note that becoming a non-resident in this way does not exempt you from paying taxes in your home country for other income earned abroad (such as dividends, interest, and capital gains).
The Beckham law, or the Special Expats Tax Regime, also known as SETR, was introduced as a incentive to attract talent and qualified workers from around the world to work in Spain. The tax regime was recently amended to reduce the non-resident period that individuals must satisfy before they can benefit from the law. The new rules also allow telework to be considered as an eligible activity.
To be eligible for the SETR, an expat must spend at least 183 days in Spain during the year. In addition, they must not have been a resident of Spain for the previous 10 years prior to their move. In order to qualify for the reduced tax rate, an expat must make a formal application and submit a series of documents. Individuals that meet the requirements of the Beckham law will be taxed at a fixed rate of 24% for their employment income and will not be required to file the informative tax return on assets abroad (Modelo 720).
There are a number of advantages to applying for the SETR. One of the most important is that it provides a significant financial advantage for high-income earners, as they would be paying taxes at a fixed rate of 24% compared to the progressive rates that apply to residents (upto 45%). The SETR also does not require them to file the 720 model tax return.
In addition to the reduced income tax, an individual that qualifies for the SETR will not be liable to pay wealth tax on their property and assets held outside of Spain. This is a major advantage, as wealth tax can be a significant burden for expats moving to Spain. The new rules also eliminate the requirement to maintain a Spanish bank account and the ability to make use of the country’s double taxation treaties. spain beckham law