The international tax regime, provided for in article 93 of Law 35/2006 of 28 November, of the IRPF, allows workers, professionals, entrepreneurs and investors who become tax residents in Spain by moving to Spanish territory to choose to tax on non-resident income tax (IRNR), with certain particularities, while still holding the status of taxpayers of the IRPF, during the year in which the change of residence takes place and in the following five years.
Known as “Beckham Law” because its origin is located in 2005, when David Beckham joined Real Madrid and was one of the first media cases associated with this regime, it offers a double advantage: on the one hand, it restricts taxation in Spain to certain income linked to Spanish territory, maintaining the possibility of proving tax residence in Spain; on the other, it applies lower tax rates than the marginal ordinary maximums of the IRF that it would be appropriate to apply on the associated returns, usually high.
Keys to international tax planning: the expatriate regime
Beneficiaries
The scheme was significantly reformed in 2023 to incorporate new profiles (such as distance workers, entrepreneurs and skilled professionals, as well as those involved in training, research, development and innovation) and to extend its application to certain relatives of the taxpayer, as spouse, minor children or with disabilities and, if there is no marriage link, the parent of these children.
Duration
The application of the scheme covers the exercise in which the taxpayer acquires habitual residence in Spain and the five subsequent tax periods.
Scope
A) For workers, professionals, entrepreneurs and investors displaced to Spain, access to the regime requires that, in general, these requirements be met:
- Not having been a tax resident in Spain during the five tax periods preceding the posting.
- Don't be a professional athlete.
- The transfer to Spain (in the first year of application of the scheme or in the year immediately preceding) takes place in one of these circumstances:
- A contract of employment shall mean that this is the case when:
- An employment relationship (ordinary, special or statutory) is initiated with an employer in Spain.
- The displacement is ordered by the employer and there is a letter of displacement.
- The transfer is not ordered by the employer, but the work is carried out at a distance using exclusively computer/telematic/ telecommunications means and the international teleworking visa provided for in Law 14/2013 of 27 September is available.
- By acquiring the status of administrator of an entity, regardless of the percentage of participation, unless it is a equity entity, in which case the equity share should be less than 25%.
- To develop in Spain an economic activity considered entrepreneurial according to article 70 of Law 14/2013, of 27 September.
- To develop in Spain an economic activity as a highly qualified professional who provides services to start-ups or carries out training, research, development and innovation, provided that the remuneration for these activities together represents more than 40% of their total business, professional and personal work performance.
- Not to obtain income that would be qualified as obtained by permanent establishment in Spain, except in the cases of entrepreneurial activity or economic activity by highly qualified professionals that enable the regime.
(B) For relatives linked to the displaced taxpayer.
They are eligible, linked to the principal taxpayer:
- The spouse.
- Children under 25 years of age or of any age if there is a disability.
- If there is no marriage bond, the parent of these children.
In addition, the following conditions must be met:
- Move to Spain together with the taxpayer (impatriate) or do so thereafter, provided that the first tax period in which the scheme applies to the principal taxpayer has not ended.
- To acquire tax residence in Spain as a result of this displacement.
- Not having been resident in Spain in the five tax periods prior to posting.
- Not to obtain income that would be considered to have been obtained by permanent establishment in Spain.
- That the sum of the liquidated bases of the family members in each financial year in which the scheme is applied is less than the liquidated base of the principal taxpayer that gives rise to the application of the scheme and to which they are linked.
Limitation to income from Spanish sources
In the context of efficient international tax planning, those who benefit from the scheme pay only for income earned in Spanish territory, with one exception: labour returns and returns derived from entrepreneurial economic activities pay in full in Spain, regardless of their country of origin.
Taxation at fixed rate of 24 per cent
The most characteristic advantage is the application of a fixed rate of 24% for rents other than dividends or other income from movable capital or capital gains by transfer of assets, up to 600,000 euros. The excess over this threshold taxes 47%.
Heritage tax: only for goods located in Spain
In the face of the general regime of the IRPF (in which the Heritage Tax can reach world goods and rights), the beneficiaries of this regime, during its validity, pay for Heritage only for real obligation: exclusively for the goods and rights of which they are entitled at 31 December when they are located in Spain or are exerciseable or enforceable in Spanish territory.
Simplification of tax obligations
Persons covered by the scheme are not required to submit Model 720 (declaration of property and rights abroad), which significantly reduces the administrative burden and risk of non-compliance.
Special declaration model
The opter must submit the Model 151 electronically, within the same general time limit as for the declarations of the IRPF.
The special regime of workers posted to Spain remains a competitive fiscal instrument To attract international talent. The 2023 reform updated it to adapt it to teleworking and digital entrepreneurship, also expanding the potentially beneficiary groups. In any case, it is advisable to have specialized tax advice to review the fit of each assumption and ensure compliance with the required requirements.
LEGAL NOTICE
This note is only informative and does not constitute tax advice. No liability is assumed for damages or losses arising from decisions taken (or not taken) on the basis of the information contained in this document.
