Key questions and answers on Beckham’s Law
Beckham’s Law, also known as the Beckham Rule or the Beckham Tax, is a tax regulation that was introduced in certain countries to attract high-income individuals, particularly professional athletes and celebrities. This law has been the subject of much discussion due to its implications and effects on taxation.
Who is eligible for the law and how can I access it?
In general terms, Ex-pats, who decide to relocate to Spain can apply for Beckahm’s law if they meet the following criteria:
- They have not been a tax resident in Spain in the past five years
- They are moving to Spain for work purposes. That is, they have received an employment offer before entering the country (or have a Spanish digital nomad visa), transferring from a foreign company to Spain, or are the director of a company located in the country in which they do not own more than 25% of its shares (unless they have a startup/entrepreneur visa)
- They do not receive income that would qualify as obtained from a permanent establishment in Spain. Thus, the hiring company must be Spanish (unless they have a nomad/ or startup/entrepreneur visa)
- They must apply for the special regime within six months of registering with the local Spanish Social security system
Beckham’s Law: advantages and disadvantages
The main advatages are that the Ex-pats will only pay income tax on their work-related income (worldwide) and on income that originates in Spain, e.g. rental income, dividends paid out by Spanish entities, etc.
Instead of paying this tax at a progressive rate, Ex.pats who opt for the Beckham Law pay a flat rate of 24% up to the amount of €600,000. If the income exceeds the maximum amount, a flat rate of 45% will be charged.
Other benefits of the Beckham Law are that the Modelo 720 (informative declaration of assets held abroad) does not have to be filed. Also, the wealth tax is only levied on assets held in Spain.
On the downside, some countries, such as Germany, suspend the application of double taxation treaties when the Beckham’s Law is invoked. There may be effective double taxation of employment income, especially in the first year of the relocation to Spain.
New developments
As part of the adoption of the «Start-Up Law», which came into force on 01.01.2023, the conditions for applying for the Beckham’s Law were lowered and the group of eligible persons was expanded.
The special regime’s application scope is extended to the spouse of the main applicant. It also includes children under 25 years of age or disabled (with no age limit in this case), or even their parent, in the event that there is no marital relationship with the main applicant, provided that they move to Spain no later than the first year of application of the special regime to main applicant and some meet specific requirements.
For any questions related to this topic or in Intellectual and Industrial Property matters, please do not hesitate to contact us at 932 000 149 or by e-mail at mwesthofen@etl.es.
Martin Westhofen
German Desk/Asesor Legal