As an employer, attracting top international talent is crucial for maintaining a competitive edge in today’s global market. Spain offers a significant tax benefit to help facilitate this through the Beckham Law. Officially known as the “Régimen Especial” (Special Regime) for Inbound Workers, this law provides strategic advantages for employers and employees by reducing the tax burden on high-skilled professionals moving to Spain. This article outlines the Beckham Law’s specifics, including its benefits, eligibility criteria, and application process, helping you understand how to leverage this regime to attract and retain top talent.

What is the Beckham Law?

Introduced in 2005, the Beckham Law is a special tax regime designed to attract skilled professionals to Spain by offering them a reduced tax rate for their first six years in the country. Instead of being subject to Spain’s progressive income tax rates, which can reach up to 48% or more depending on the autonomous community, qualifying individuals are taxed at a flat rate of 24% on their first €600.000 of income earned in Spain. Income above this threshold is taxed at 47%. This strategic advantage has proven effective in attracting top-tier professionals worldwide. It can significantly affect an employee’s net income, making a position in Spain more attractive.

Who can benefit from the Beckham Law?

To leverage the Beckham Law for your employees, ensure they meet the following criteria:

1. Non-Residency: They must not have been a Spanish tax resident for at least ten years before their move.
2. Purpose of Move: They must move to Spain for work purposes, which includes receiving a job offer before entering the country, being transferred from a foreign company, or becoming a director of a Spanish company (with a stake of less than 25% in the entity’s capital).
3. Location of Work: Their professional duties should be primarily conducted in Spain, with at most 15% of their activities conducted abroad.
4. Source of Income: They should not receive income from a permanent establishment in Spain.

Recent amendments have broadened the eligibility, now including:

• Remote Workers: Providing services online without a Spanish employer.
• Directors: Of companies that do not qualify as passive holding entities.
• Innovative Professionals: Involved in start-up activities or research & development.
• Family Members: Spouses and children under 25 of qualifying expatriates, provided they move within the first year.

Certain groups are not eligible for the Beckham Law:

• Freelancers or self-employed workers
• Professional athletes
• Directors who own more than 25% of a company’s equity in Spain

What are the advantages of the Beckham Law?

Significant tax reductions

One of the primary advantages of the Beckham Law is the substantial reduction in income tax for employees. Eligible employees pay a flat tax rate of 24% on income up to €600,000 and 47% on any income above that instead of higher progressive rates of up to 48%. This tax reduction can significantly increase the attractiveness of a position in Spain.

Exemption from wealth tax

Qualifying individuals are considered non-residents for tax purposes, even if they stay in Spain for more than six months yearly. This means they only pay wealth tax on properties in Spain, with rates ranging from 0.2% to 2.5%. Assets held outside Spain are not subject to this tax.

Simplified capital gains and dividends tax

Under the Beckham Law, capital gains tax applies only to profits derived from selling assets within Spain, taxed at a flat rate of 19%. Dividends and gains from foreign assets are not taxed in Spain, providing an additional incentive for international talent.

No obligation to file Modelo 720

Employees benefiting from the Beckham Law are exempt from filing Modelo 720, a form that residents in Spain with assets outside the country valued over €50,000 must submit annually. This exemption reduces administrative burdens and the risk of penalties for your employees.

Favourable conditions for employment income

The Beckham Law also includes a provision exempting from taxation employment income received as remuneration in kind, aligning with the tax benefits enjoyed by Spanish residents under the general government.

How to apply for the Beckham Law

To help your employees benefit from the Beckham Law, guide them through the following steps:

1. Form 030: Download and submit Form 030 to the Spanish Tax Agency online.
2. Approval: Once they receive approval, they must submit Form 149 with a copy of their complete passport, NIE, employment contract, and social security number.
3. Final Acceptance: The process typically takes one to two months, after which they will receive a certificate to hand to you as the employer to start applying the reduced tax rate.

Harness the advantages of utilizing EOR for your employment in Spain

As the specialized Employer of Record in Spain, the rapid integration of teams stands out as a significant advantage for employers leveraging the services of Spanish Employer of Record. With all our expertise in local employment laws, we ensure swift onboarding, regardless of the employee’s origin. Proficiency is crucial for you while looking to seamlessly integrate new team members into their global workforce.

Spanish Employer of Record manages all compliance issues, ensuring the employment structure aligns with the specific labor laws of Spain. This meticulous approach helps employers avoid legal complications, establishing a smooth and legally sound international workforce.

Cost-effectiveness emerges as a compelling factor for employers opting for an EOR solution, proving more economically viable compared to the complexities and expenses associated with establishing a new entity in a foreign country. This financial advantage becomes particularly evident when relocating or hiring only a single or a few employees in Spain, making an Employer of Record a cost-effective and efficient choice for employers expanding globally.

Spanish Employer of Record can assist

The Beckham Law offers substantial tax advantages that can help you attract and retain top international talent. By understanding the eligibility criteria and benefits, you can strategically position your company as an attractive destination for high-skilled professionals, ensuring a competitive edge in the global market. Spanish Employer of Record can further simplify this process. We can handle all compliance, payroll, and tax requirements, ensuring that your employees benefit from the Beckham Law efficiently and legally. This lets you focus on growing your business and managing your international talent effectively. Contact us today!