For years, many German-speaking entrepreneurs, investors, and wealthy individuals have been considering moving to Spain. Regions such as Mallorca, Ibiza, and the Canary Islands are particularly popular, offering a Mediterranean lifestyle, high quality of life, and good infrastructure.
This quickly raises the question of tax liability. Spain is not a classic tax haven: anyone who becomes a tax resident there must generally expect high income tax rates and extensive reporting requirements. This makes a special tax regime introduced by Spain several years ago and refined several times since then to attract qualified professionals and investors from abroad – the so-called Beckham Law – all the more interesting.
What is behind the Beckham Law?
The Beckham Law is a special tax regime governed by Article 93 of the Spanish Income Tax Law. Originally introduced to provide tax relief for top international athletes such as David Beckham (who was playing for Real Madrid at the time), the scheme is now also open to other professional groups, such as executives, entrepreneurs, remote workers, and investors.
Those who meet the requirements can be taxed as non-residents for up to six years, even though they are resident in Spain for tax purposes. This means that only income earned in Spain is taxed – with a few exceptions – at a flat rate of 24 percent up to an income of EUR 600,000 per year. Income from abroad therefore remains untaxed in Spain.
What specific advantages does Spanish tax law offer?
One major advantage is the flat-rate taxation of earned income. Instead of the regular progressive income tax, which can be as high as almost 50 percent in Spain, a fixed rate of 24 percent applies to earned income – up to a limit of EUR 600,000. Income above this amount is taxed at 47 percent.
However, the biggest advantage for wealthy individuals who have sources of income outside Spain is certainly that only income earned in Spain is taxed. Income from abroad – such as from rentals, capital gains, or company holdings (interest, dividends, capital gains) – remains tax-free. Assets outside Spain are also not subject to Spanish wealth tax, which is particularly important for clients with extensive international investments.
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Finally, there is no obligation to submit Modelo 720, a complex declaration of foreign assets. This declaration is mandatory for regular tax residents. Errors or omissions can usually lead to severe penalties.
Who can take advantage of the Beckham Law?
The regulation is aimed at individuals who move to Spain for professional reasons and become tax residents there. The following requirements apply, for example:
- The applicant must not have been a tax resident in Spain in the last five years. The Beckham Law is therefore primarily aimed at foreigners who decide to move to Spain for the first time.
- The move must be for professional reasons – for example, due to a new job, entrepreneurial activity (e.g. managing director of a corporation in which the applicant holds a minority stake) or a remote working relationship.
- The application must be submitted within six months of starting work in Spain.
Family members can also benefit from the scheme under certain conditions, such as spouses and children under the age of 25, provided they move to Spain with the main applicant and do not exceed certain income limits.
The regulations are much more complicated in detail than we can describe here, e.g. for applicants who move to Spain as shareholders of a fiscally transparent company (e.g. U.S. LLC, German limited partnership, English LLP). Anyone considering moving to Spain should seek advice on all the requirements and tax implications.
Disadvantages of the Beckham Law
Please note: As attractive as the Beckham Law may be, it also comes with restrictions. Those who fall under the Beckham Law cannot claim general tax allowances or deductions, such as for social security contributions or family allowances. The tax treatment of real estate is also less advantageous: maintenance or financing costs are not deductible, and a so-called renta imputada is payable for owner-occupied property.
In addition, freelance work is only permitted in certain exceptional cases, such as innovative start-ups or research activities. Those who wish to work as traditional self-employed persons in Spain cannot usually take advantage of the Beckham Law.
Another point concerns double taxation agreements: the Beckham Law effectively nullifies the effect of these agreements for some types of income, which can lead to double taxation in individual cases. Although there are internal mechanisms within the Beckham Law to avoid such cases, an individual review is essential in this regard.
Finally, anyone who makes capital gains from cryptocurrencies must pay capital gains tax (19–30 percent) on them. Staking income, on the other hand, is subject to a tax rate of 19–28 percent. Income from cryptocurrencies is therefore not considered to be earned abroad and is not tax-exempt under the Beckham Law.
How does the application process work with the tax authorities in Spain?
The application is submitted electronically to the Spanish tax authorities (Agencia Tributaria). You must first register with the Spanish tax register (form 030). The deadline for submitting the application is six months from the start of your activity – a strict deadline, failure to meet which will result in exclusion from the scheme.
If you are planning to move to Spain, we recommend that you contact us at an early stage so that we can review your case together with our Spanish colleagues before you take the final step. The Beckham Law is particularly attractive for high-income individuals with international assets who wish to relocate to Spain. It offers significant tax relief and greatly reduces the administrative burden. However, the scheme is complex and subject to strict conditions. Early, careful planning and professional advice are therefore essential – and we are happy to assist you with this.
