The Beckham Law (impatriate regime): how to be taxed as a non resident in Spain

The so called Beckham Law is the special tax regime for workers, professionals, entrepreneurs and investors posted to Spanish territory, set out in article 93 of the IRPF Act (Ley 35/2006, the Spanish personal income tax act) and in articles 113 and following of its implementing regulation. It owes its nickname to the fact that one of its first well known beneficiaries was the footballer David Beckham when he joined Real Madrid.

Its advantage is simple to understand: someone who moves to Spain and acquires tax residence here can choose to be taxed under the rules of the non resident income tax (IRNR), even though formally they remain an IRPF taxpayer. In practice this means applying a flat rate instead of the general progressive IRPF scale, which rises in brackets.

On employment income the rate is 24% up to €600,000 a year and 47% on the excess above that figure. For a high income, being taxed at a flat 24% can mean a significant difference compared with the progressive scale, whose top brackets exceed that percentage.

One particular feature is worth keeping in mind: while the regime applies, all of the employment income you earn is deemed to be obtained in Spain and is taxed here, regardless of the country where it is generated. The rest of your income (for example, certain investment income) follows the IRNR rules. You can check the details of your own case on the service page for this procedure.

Ley 28/2022, on promoting the startup ecosystem, reformed this regime with effect from 1 January 2023 and widened considerably who can apply. The general requirement is not to have been tax resident in Spain during the five tax periods before the move (before the reform, ten tax periods were required).

The move to Spain must happen for one of these reasons: an employment contract with an employer in Spain (professional sportspeople are excluded), remote work for a foreign company using telematic means (the well known digital nomad profile), being a director of a company, carrying out in Spain an economic activity classified as entrepreneurial, or providing services as a highly qualified professional to startups or in training, research, development and innovation activities (I+D+i).

As a general rule, you must not obtain income through a permanent establishment located in Spain, except in the entrepreneurial activity or qualified professional cases provided for by the rule. An autonomo (self employed worker registered in Spain) carrying out an ordinary activity, outside those profiles, as a general rule does not fit into the regime.

The reform also extended the possibility of joining to the family members of the main taxpayer (among others, the spouse and children under 25 or with a disability), provided that they meet the conditions and requirements set by law. If you have doubts about whether your family situation fits, Managora reviews it before filing the option.

Opting into the regime is not automatic: you have to notify the Agencia Tributaria (AEAT, the Spanish tax authority, commonly called Hacienda) by filing modelo 149. This is the key step, because the right to be taxed under the Beckham Law depends on exercising the option in the correct time and form.

The maximum deadline to file modelo 149 is six months from the start date of the activity shown in your registration with the Seguridad Social (the Spanish social security system), or in the documentation that allows you to keep the social security legislation of your country of origin, or in the supporting document where registration is not compulsory. This deadline is set out in article 116 of the IRPF regulation.

The deadline cannot be extended. If you let it pass, you lose the right to use the special regime and you are taxed under general IRPF like any other resident, on the progressive scale. That is why it is important not to leave the notification until the last moment and to have the documentation ready from the moment you arrive in Spain.

Managora prepares and files modelo 149 for you, gathers the documentation evidencing the move and makes sure the option is exercised within the six months. You can see what the service covers and the current price on the service page for this procedure.

The regime applies during the tax period in which the change of residence takes place and during the five following tax periods, that is, a maximum of six years in total, provided that the conditions that gave the right to join are maintained.

During those years, the annual return is not filed with modelo 100, the ordinary IRPF return, but with modelo 151, which is specific to this regime. The tax is settled in that return by applying the IRNR rates described above.

The regime can end early in two ways: voluntary waiver (also notified with modelo 149, within the time limits provided) or exclusion for failing to meet the conditions. It is worth knowing that, if you waive the regime or are excluded, you will not be able to apply for it again later for the same move.

When the six years are over, you move on to being taxed under general IRPF like any other tax resident in Spain. Managora reminds you of the deadlines for each filing season and files modelo 151 for as long as the regime lasts.

The main advantage is the flat rate of 24% on employment income up to €600,000, which can work out more favourable than the progressive IRPF scale for middle and high incomes. In addition, with some qualifications, a good part of foreign source income other than employment income falls outside taxation in Spain while the regime applies.

The regime is not always the best option. For moderate employment income, the general IRPF scale (with its reductions and personal and family allowances) can work out better, because the Beckham Law does not let you apply a good part of those reductions and deductions. It is a decision worth calculating case by case.

There are three usual mistakes: letting the six month deadline pass, not evidencing the reason for the move properly, and assuming that any autonomo can join. It is also common to forget that the option affects how your worldwide employment income is taxed. Managora reviews these points before filing the option so that there are no surprises.