The special tax regime for workers relocating to Spain, known until 2023 as the “Beckham Law,” has undergone various modifications since its introduction in 2005. Under this regime, foreign workers who move to Spain can benefit from a favourable tax rate on their income for a limited period.
About the New Tax Law
In Spain, Law 28/2022 of December 21, 2022, in force, promoting the ecosystem of emerging companies, commonly known as the “Startups Law,” introduces, for the first time, a specific visa for digital nomads or international remote workers, allowing foreign individuals who work remotely (freelancers or employees of foreign companies) to legally reside in Spain while carrying out their professional activity. It regulates the initial stay permit of up to 1 year (visa) or 3 years (if applied for from Spain), renewable, for which it is required to demonstrate professional experience or a university degree, and prior work activity with the company or clients, and may have tax benefits, such as the option to be taxed under the inpatriate regime (type “Beckham Law”).
The special tax regime for digital nomads in Spain is regulated by the same law that establishes the visa for this group, but with specific reference to the inpatriate tax regime, which modifies Article 93 of the Personal Income Tax Law (Law 35/2006) to expand access to the special tax regime for inpatriates. Also known as the “Beckham Law,” it allows individuals who move to live in Spain to be taxed only on their Spanish-source income (and some foreign income linked to work), at a reduced fixed rate of 24% on the first €600,000 annually for 6 years, instead of the normal progressive Personal Income Tax rate.
It is important to emphasize that it is a single law that regulates two completely different things: visas and tax regime, and therefore they have different and independent processes. This WhitePaper refers solely to the tax regime.
Beckham Law until 2023
The main features of the regime in force until the 2023 reform were:
- Taxation as a non-resident: Beneficiaries were taxed under the rules of the Non-Resident Income Tax (IRNR), which meant they only had to declare and pay taxes on income obtained in Spain, excluding worldwide income.
- Fixed tax rate: A fixed tax rate of 24% was applied to the first €600,000 of annual Spanish-source income. Income exceeding this threshold was subject to a higher tax rate.
- Duration of the regime: The regime was applicable for a period of six years, including the year of arrival and the following five years.
- Previous residency requirements: To qualify for the regime, it was necessary not to have been a tax resident in Spain during the ten years prior to relocation.
- Reason for relocation: The move to Spain had to be motivated by a job offer or a specific work assignment.
These conditions were designed to attract highly qualified professionals and elite athletes, offering favourable tax treatment for a limited period.
Startups Law since 2023
As of January 1, 2023, the special tax regime for workers relocated to Spain has been reformed with the aim of attracting international talent and adapting to new forms of work. The main features and novelties introduced by this reform are detailed below:
Expansion to new groups, including:
- International remote workers: Individuals who move to Spain and continue providing remote services for foreign companies through IT or telematic means.
- Entrepreneurs: Individuals who develop an entrepreneurial activity in Spain, provided they have a favorable report from ENISA (Empresa Nacional de Innovación, S.A.).
- Highly qualified professionals: Those who carry out economic activities in Spain, such as services to emerging companies or activities of training, research, development, and innovation, and whose remuneration represents more than 40% of their total income.
- Administrators of emerging companies: The previous requirement of a maximum 25% shareholding in the capital stock is eliminated, allowing administrators of non-asset-holding companies to qualify for the regime, regardless of their shareholding.
Reduction of the previous non-residency period was introduced so that the taxpayer must not have been a tax resident in Spain is reduced from 10 to 5 years, facilitating the return of Spanish citizens who have resided abroad for more than five years.
Extension to family members.
The regime is extended to certain family members of the main taxpayer, provided they move to Spain with the taxpayer or at a later time, as long as the first tax period in which the special regime applies to the taxpayer has not ended, and they acquire their tax residence in Spain, have not been residents in Spain during the five tax periods prior to relocation, and do not obtain income that would be classified as obtained through a permanent establishment in Spain, except in cases of entrepreneurial activities or highly qualified professionals. Lastly, the sum of their taxable bases in each tax period must be less than that of the main taxpayer.
Eligible family members include the spouse or, in the absence of marital bond, the parent of the children, and children under 25 years of age or of any age in the case of disability.
Duration of the regime.
The regime applies for a total of six years: the year in which tax residence in Spain is acquired and the following five years.
Taxation and Tax Rates
Beneficiaries are taxed under the Non-Resident Income Tax (IRNR) with the following particularities:
Income from work and other general incomes: Up to €600,000: fixed rate of 24%. From €600,000.01 onwards: fixed rate of 47%.
Savings income (dividends, interest, and capital gains): Up to €6,000: 19%, from €6,000.01 to €50,000: 21%, from €50,000.01 to €200,000: 23%, from €200,000.01 to €300,000: 27%, and over €300,000: 28%.
Forms to Use
Form 149 is a census declaration through which an individual notifies the Tax Agency of their intention to apply for the special tax regime provided in Article 93 of the Personal Income Tax Law when moving to Spain for work reasons.
It serves to inform the Tax Agency that you have acquired tax residence in Spain, that you meet the requirements to be taxed under the special regime as if you were a non-resident in certain tax aspects, and that you wish to apply this regime from the year you become a resident.
It must be submitted within 6 months from the start date of the activity in Spain or from the date of entry into Spanish territory (as applicable).
If you are self-employed (freelancer), you must meet the requirements as an innovative entrepreneur or qualified professional (with a favourable report from ENISA). The other option is to have an employer, either national or foreign, or you may have been relocated by a multinational to work in a subsidiary in Spain, even if your legal employer remains foreign.
If the Tax Agency accepts the application, you will begin to be taxed under the special regime and subsequently must file your Non-Resident Income Tax return using Form 151, instead of the general form (Form 100 IRPF).
Form 151 is the specific form that must be used by taxpayers who have opted for the special tax regime under Article 93 of the Personal Income Tax Law, that is, those who have previously applied for this regime using Form 149.
Forms 417/418: Taxpayers under the special regime are subject to the Wealth Tax and the Temporary Solidarity Tax on Large Fortunes for assets and rights located in Spain.
Form 720: Taxpayers under the special tax regime for inpatriates (the so-called Beckham regime, modified by Law 28/2022) are required to file Form 720 if they meet the value and ownership requirements.
Documentation
Below is the updated documentation based on the regulations in force until 2024 regarding the special tax regime for workers relocated to Spanish territory, now also adapted to digital nomads with the Startups Law.
To apply for this regime before the Spanish Tax Agency, the following is required:
- Copy of the employment contract or relocation letter, indicating the start date, duties to be performed, duration of the contract, and place of service provision in Spain.
- If you are a digital freelancer (self-employed or remote worker): you must provide proof that you work for foreign companies and do not conduct economic activity for the Spanish market. If you are an entrepreneur: additional documentation accrediting your innovative project (endorsed by ENISA, for example) and a justification of the type of activity (technological or digital).
- If you are an employee relocated to Spain, you must provide the relocation letter from the foreign company, if applicable, and a sworn statement of not having been a tax resident in Spain in the last 5 years.
- For digital entrepreneurs (Startups Law), you must submit the accredited innovative project (favorable report from ENISA or another authorized body) and documentation of the business plan, team, financing, etc.
- Certificate of previous tax residence and sworn statement of not having been a tax resident in Spain in the last 5 years.
- Registration with the Spanish Social Security, provided the employer is national, as an employee or as a self-employed worker.
- Copy of the DNI/NIE (Foreigner Identification Number).
- Copy of the Passport (complete copy, usually of all pages of the passport).
