The Impatriates Law or Beckham Law became known to the public when the Manchester United player could accepted Real Madrid’s offer to play for the white team thanks. This law is a special tax regime that allows foreigners who move to Spain to pay a flat tax rate of 24% only on the income they earn in Spain, instead of a progressive tax on income earned worldwide (19-45%). For Beckham, this was a determining factor when it came to accepting his new jersey. That’s why we Spaniards call it the “Beckham Law”.
It is currently in the news due to the arrival of the European Funds and the Digitalization of Spain. There is a preliminary draft under study. It seeks a revision of the law to set up a limited space of low taxes, in this case with an income tax rate of 15%. For those entrepreneurs who choose Spain to locate their business project and attract digital nomads -something that Portugal has already done- and technology companies.
Until 2005 all foreigners who moved to Spain and spent more than 6 months (183 days) a year in the country became tax residents.
After the entry into force of this law, any foreigner who moves to Spain for more than 183 days and who had not been a tax resident in Spain during the previous 10 years can benefit from it, paying taxes under taxation rules very similar to those of non-residents.
The reason for the move must be the signing of an employment contract with an employer in Spain, unless the interested party is a director of a company in the country.
In the case of being a director of a company, he/she cannot own more than 24% of the company for the Beckham Law to be applicable.
In addition, instead of paying this tax at a progressive rate that increases as income increases, a flat rate of 24% is paid up to the amount of 600,000 euros. In the event that income exceeds the maximum amount, a flat rate of 47% is payable.
The duration is 6 years (5 years plus the year in which the tax residence in Spain is acquired).
Now it seems that the Beckham law is in the process of revision to adapt to a different global reality.
We will see how it develops.