September 22, 2023

The Beckham law, also known as the Special Expats Tax Regime (SETR), is a tax regime that allows expats to save on taxes when moving to Spain for work purposes. It was named after footballer David Beckham who was one of the first people to benefit from it, although it has since undergone several changes and can no longer be used by professional athletes. This article will tell you all about it, its requirements and how it can help you save on taxes when moving to Spain.

The new version of the Beckham law allows foreigners to take advantage of it for six years. To qualify, the individual must have moved to Spain with a work contract in place and spend more than 183 days per year in the country. They must also not have been a resident in Spain in the previous five or ten years and the move must be for work purposes, rather than tourism.

It is important to note that the law does not apply to companies, and only to those individuals who are self-employed or who run their own company. This is to ensure that the majority of the earnings come from the person’s own business. However, this does not exclude other sources of income, such as investments or rental income. It is also worth noting that the law does not cover any other types of income such as severance pay, bonuses, or ad hoc income.

If an expat wishes to take advantage of this regime, they must submit a declaration form to the Spanish Tax Office called Modelo 720. This must be done each month, detailing all income and expenses for the previous period. The amount of tax payable is then calculated. For the first six years, those who are eligible for the Beckham law will be subject to a fixed rate of 24% on their income up to a maximum of EUR 600,000. This is much lower than the rates that Spanish residents are charged, which can reach as high as 47%.

Once the six years have passed, the expat will be subject to regular income tax as a resident in Spain. This will include their salaries, any other income and any capital gains from the sale of assets. However, this does not include the property tax.

Another advantage of this scheme is that it does not change the taxable basis of any of the other sources of income such as dividends or interest from bank accounts. This is because the taxable base of this type of income is calculated in accordance with the laws and regulations of the country where it is earned. The law also does not affect other taxes such as wealth or inheritance tax, which is levied on the net value of an individual’s worldwide assets. This is why the Beckham law is such an attractive option for those who are planning to move to Spain for work reasons. beckham law spain

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