If you’re considering a move to Spain, it’s important that you take the time to understand the requirements of the “Beckham Law.” Also known as the Special Expats Tax Regime (SETR) this tax scheme is intended to attract international talent. As such, it provides a huge incentive in terms of personal income taxes for those who meet the criteria.
The Beckham Law is a tax exemption for foreign workers who relocate to Spain to work in the country’s booming high-tech industries. Originally named after footballer David Beckham who became one of the first to take advantage of the scheme, it was created as an incentive to encourage companies to hire internationally experienced and highly-skilled workforces. It is worth noting that, as of 2023, the requirements to qualify for the scheme have been reduced from 10 years to 5 of residency prior to relocating to Spain.
Under the current rules, a foreign worker who has spent more than 183 days in Spain during a calendar year is considered to be a resident for the purposes of Spanish personal income tax (IRPF). This means they are liable for a flat rate of 24% on any income earned in the country, as well as being subject to progressive rates that can reach up to 47%. This can have a significant impact on an expat’s financial situation, and so the new law has been introduced to help reduce this burden.
Foreign workers that meet the requirements of the Beckham Law will be able to benefit from a reduced tax rate of 24% on any income generated in the country, as well as being exempt from a progressive tax system with rates up to 47%. In addition, they won’t be liable for property taxes or wealth taxes on the sale of any assets that are located outside of Spain.
This scheme can be used by foreign employees who have settled in the country as a result of an employment contract with a Spanish company, or by directors that have moved to Spain to manage a foreign-based business. It can also be used by foreign investors who have made a significant investment in the country’s emerging high-tech sector.
Individuals that want to apply for the Beckham Law must inform the Spanish tax office of their intention to do so by submitting Form 210, along with a list of any relevant documents. Once the application has been approved, the individual will need to register for a Spanish tax identification number and submit their income tax return via Form 151.
At Deel, we make it easy for companies to support global mobility and recruit talented foreign workers by taking care of all immigration processes and paperwork. Our in-house team can handle everything from visa application and forms to working with local authorities to advising on payroll. Get in touch with us today to learn more about how we can make the relocation process less complicated for your company. beckham law spain