Following on from our special report on Spain´s Beckham Law, tax specialist Antonio Rodriguez of US Tax Consultants answers some of you frequently asked questions.
Common Q&A about the Special Tax Regime for Relocated Workers.
What is the advantage of the special regime?
The special regime for workers relocated to Spain allows for a fixed tax rate of 24% on employment income up to €600,000. Income earned abroad will not be taxed in Spain, unless it constitutes employment income.
When is it worth applying for the special regime?
It depends on each person’s financial and personal circumstances. However, as a general reference, the regime becomes advantageous with a gross annual salary of around €60,000, considering only employment income.
What is the applicable tax rate?
Employment income up to €600,000 is taxed at 24%. Above this amount, the general Spanish Personal Income Tax (IRPF) rules apply. This means that income exceeding €600,000 is taxed under the progressive IRPF scales, which can reach up to 47%, depending on the amount and the autonomous community.
Dividends, interest, and capital gains of Spanish origin are taxed at rates ranging from 19% to 28%.
Are there any disadvantages?
There are two possible disadvantages:
First, it is not possible to deduct expenses or apply exemptions (for example, severance pay is not exempt) or general regime reductions.
Second, it could result in a higher tax burden abroad since double taxation treaties may not apply.
Is Spain the only country with this type of regime?
No, several other countries have similar special regimes, such as Portugal (Non-Habitual Resident), the United Kingdom, or Switzerland.
Why has this inpatriate law been approved in Spain?
The purpose of the law is to attract talent or highly qualified individuals to Spain, to improve internationalization and the competitiveness of Spanish companies. It is not intended for investors or people who do not wish to work in Spain, and currently also excludes athletes.
Is the special regime only applicable to foreigners?
No, nationality does not matter when applying under the Startups Law.
What are the requirements to apply for the special regime?
The law requires that the person becomes a tax resident in Spain (e.g., if staying in Spain for more than 183 days in a year) due to signing an employment contract, being relocated by an employer, or becoming a company director (not linked to the individual).
There must be a causal relationship between the start of the job or directorship and the relocation to Spain.
Additionally, the individual must not have been a tax resident in Spain during the past 5 years and must not receive income from economic activities.
What is the deadline to apply for the special regime?
In general, the deadline is 6 months from the start of the employment relationship in Spain.
What documentation needs to be submitted?
The taxpayer wishing to apply for the special regime must first file Form 030 and then submit Form 149 along with a certificate from the employer, and documentation proving registration with Spanish Social Security or confirmation of continued coverage under the home country’s Social Security system.
How long does it take the Tax Administration to issue the certificate for the special regime?
Legally, the Tax Administration has 10 days from receipt of the application. However, in practice, it usually takes 1–2 months.
Can the spouse and children also benefit from the special regime?
Yes, but they must apply separately. This is one of the new features of the special regime since 2023.
What is the duration of the Special Tax Regime?
It lasts for 6 years (the year in which tax residence is acquired, plus the following 5 years).
Can I renounce the Special Tax Regime if it’s no longer beneficial?
Yes, but only during the months of November or December, with effect for the following year.
Can a taxpayer be excluded from the Startups Law?
Yes. If the Tax Administration discovers that the taxpayer does not meet the requirements, they can exclude them from the special regime and issue a settlement (“parallel assessment”), demanding payment of taxes and late interest, and potentially applying penalties.
Is the right to the Startups Law lost in case of dismissal?
No, the regime is not lost if the employment ends for reasons beyond the taxpayer’s control and they remain unemployed or inactive for a short period before starting a new job.
Is the regime lost in case of a job change?
No, the regime is not lost if the individual voluntarily leaves a job in order to begin a new employment relationship.
Can I work for an employer in Spain and then become a director of a Spanish company?
Yes, the individual may become a director after relocating to Spain due to an employment relationship.
When must the Personal Income Tax return be filed?
Taxpayers under the Startups Law must file their tax return in the general period (April to June) but must use Form 151, which is specific to this regime.
How will the employer withhold taxes?
The employer must withhold tax as if the employee were a non-resident, meaning at a withholding rate of 24% (or 47% if employment income exceeds €600,000 annually), using Form 216 to make the payment on account.
Does the Startups Law require taxation of salary paid by my former foreign employer?
No, income from work performed before moving to Spain is not considered as earned during the application of the regime.
Can I invest in Spanish companies?
Yes, individuals under the special regime can be passive shareholders or investors in Spanish or foreign companies and receive dividends.
Is the Startups Law compatible with real estate investment in Spain?
The special regime does not prohibit real estate investment in Spain. However, it cannot result in income from economic activities (i.e., as a self-employed person with a permanent establishment in Spain). Real estate must not generate business income. Owning property in Spain may lead to notional income (“imputation of rents”) which, whether from rental or deemed income, must be declared in Form 151.
Does the Startups Law allow for international double taxation relief?
Yes, the Beckham regime allows a deduction for international double taxation (e.g., if employment income is also taxed abroad), but the deduction is limited to the lowest of the following amounts:
- 30% of the total tax liability related to the employment income,
- The amount of foreign tax paid – The result of applying the average effective tax rate to the taxable base taxed abroad.
Does someone under the Startups Law have to pay Wealth Tax in Spain?
Generally no, unless they own assets or rights located in Spain with significant value. Additionally, taxpayers under the Startups Law are not required to file Form 720 (informative declaration on assets and rights held abroad).
Does Startups Law affect receiving a gift or inheritance?
The special regime does not affect inheritance or gift tax. In many cases, the applicable rules will depend on the autonomous community where the person under the regime resides.
