Moving to Spain can provide significant tax advantages for many employees and company directors. Individuals relocating to Spain for employment purposes may opt to have their employment income taxed as a non-resident at a fixed tax rate of 24% for a period of six tax years.

Originally known as the "Beckham Law", this special tax regime—introduced to encourage internationally renowned athletes to relocate to Spain—is now regulated under Article 93 of the Spanish Personal Income Tax Act (LIRPF). Although professional athletes are no longer eligible, the regime continues to apply to employees and certain other individuals who transfer their tax residence to Spain in order to work.

Tax Consequences

The main consequence of this special regime is that, although you are regarded as a full Spanish tax resident for external purposes, you are treated internally as a non-resident taxpayer. Consequently, your employment income is not taxed according to the ordinary progressive income tax rates applicable to Spanish residents (currently reaching marginal rates of up to 45% from annual income of approximately €60,000), but instead at a flat tax rate of 24% on employment income of up to €600,000 per year (47% on the excess).

For example, a single taxpayer with no children earning a gross annual salary of €150,000 would normally pay approximately €56,000 in Spanish income tax under the ordinary progressive tax system, corresponding to an effective tax rate of around 37%.

If, however, the taxpayer successfully applies for the special tax regime under Article 93 LIRPF, the applicable tax rate is reduced to a flat 24%. In this example, the taxpayer saves approximately 13 percentage points in tax, corresponding to an annual tax saving of approximately €20,000.

Progressive tax regime: €56,000 per year (approx. 37%)

– Beckham Law regime: €36,000 per year (24%)

= Annual tax saving: €20,000

Impact on Wealth Tax

Another important feature concerns Spanish Wealth Tax. Although you are formally regarded as a Spanish tax resident, you are treated as a non-resident for the purposes of this regime. As a result, only assets located in Spain are subject to Spanish Wealth Tax.

Spanish Wealth Tax is therefore only payable if your net assets located in Spain exceed between €700,000 and €3,700,000, depending on the allowances applicable in the relevant Autonomous Community. Assets located outside Spain are generally not subject to Spanish Wealth Tax during the application of the Beckham Law. Further information can be found in our article: Spanish Wealth Tax and Solidarity Tax.

Taxation of Other Types of Income

Under the Beckham Law, all employment income is deemed to arise in Spain and is therefore taxable in Spain. As the taxpayer is generally treated as a non-resident in other jurisdictions for these purposes, double taxation is normally avoided.

Other categories of income are also generally taxed at fixed rates in Spain. However, the following types of investment income benefit from lower tax rates than the standard 24%:

Dividends and other profit distributions derived from shareholdings in companies.

Interest and other investment income.

Capital gains arising from the disposal of assets.

For these categories of income, the ordinary non-resident tax rates apply:

Up to €6,000: 19%

From €6,000 to €50,000: 21%

From €50,000 to €200,000: 23%

From €200,000 to €300,000: 27%

Above €300,000: 28%

All other income up to €600,000 is taxed at the flat rate of 24%, in the same way as employment income. Any income exceeding €600,000 is taxed at 47%, although this higher rate only applies to the amount exceeding that threshold.

 

Eligibility Requirements

As a general rule, you must not have been tax resident in Spain during the five tax years preceding your relocation. In addition, you must move to Spain for one of the following reasons:

Option 1: Commencing employment with a Spanish company, being assigned to Spain by a foreign employer, or working remotely from Spain under a home office arrangement.

Option 2: Appointment as a director or managing director of a Spanish company carrying out an economic activity. Where the company is merely a holding company, the applicant must not hold a significant shareholding. Further information is available in our section on Company Formation in Spain.

Option 3: Commencing an entrepreneurial business activity certified by the competent authority under Law 14/2013 as being innovative or of particular economic interest. Particular emphasis is placed on the creation of new employment.

Option 4: Carrying out an economic activity as a highly qualified professional working for a start-up company or in the fields of research, innovation or higher education. These circumstances must be certified by the competent authorities.

Application Procedure and Practical Considerations

In order to benefit from the special tax regime, an application must be submitted to the Spanish Tax Agency using Form 149 (Modelo 149). Although the procedure appears relatively straightforward, a large proportion of applications are rejected in practice due to insufficient evidence demonstrating that the legal requirements have been met.

A carefully prepared application, comprehensive documentary evidence, proof of the causal link between the relocation and the employment, proper management of electronic tax notifications and a prompt response to any request for additional information considerably increase the likelihood of approval.

The chronological order of the various administrative steps may also be decisive. Procedures such as municipal registration (empadronamiento) or even obtaining residence documentation should generally only be completed after careful planning and, in most cases, after employment has commenced or the appointment as director has taken effect.

Once the application has been approved, the Spanish Tax Agency issues a certificate covering the current tax year and the following five tax years. This enables the employer to withhold income tax at the flat rate of 24%. The taxpayer must subsequently file the special annual tax return using Form 151 (Modelo 151), rather than the ordinary income tax return (Modelo 100).

If, after joining the special regime, the ordinary progressive tax system would become more favourable because the effective tax rate falls below 24%, the taxpayer may opt to return to the ordinary regime for the following tax year during November or December. However, once the Beckham regime has been abandoned, it cannot subsequently be reactivated, even if the original six-year period has not yet expired.

Since 2023, spouses and dependent children may also benefit from the special tax regime, including its consequences regarding Wealth Tax and the reporting obligations under Form 720.

For the purpose of proving Spanish tax residence before foreign tax authorities, the Spanish Tax Agency may issue an official Tax Residence Certificate, which can be used as evidence of tax residence abroad.

Foreign Tax Credit (Double Taxation)

Even under the Beckham Law, situations may arise where employment income earned abroad has already been subject to withholding tax in the foreign country. A common misconception is that foreign tax paid on such employment income can always be credited in full against Spanish income tax.

In practice, however, the Spanish Tax Agency only allows a limited foreign tax credit under the Beckham regime.

Where an employee is taxed under the special regime of Article 93 of the Spanish Personal Income Tax Act (LIRPF) and receives employment income that has already been taxed abroad, the foreign tax may only be credited up to a statutory maximum.

Specifically:

The foreign tax credit is limited to 30% of the portion of the Spanish tax liability attributable to the employment income of the relevant tax year.

The deductible amount is limited to the lower of the following two amounts:

1. 1. The amount of foreign tax actually paid; or

   2. The amount obtained by applying the average effective Spanish tax rate (tipo medio efectivo de gravamen) to the portion of employment income that was taxed abroad.

The average effective tax rate is determined by dividing the total Spanish tax liability by the taxable income and is expressed to two decimal places. Under the Beckham Law, the effective tax rate is generally 24%.

Example

An employee is taxed in 2025 under the Beckham Law (Article 93 LIRPF) at the flat tax rate of 24%.

Facts:

• • Total employment income: €200,000
  • Employment income earned and taxed abroad: €10,000
  • Foreign tax paid: €5,000

Calculation:

1. Spanish income tax under the Beckham regime:

€200,000 × 24% = €48,000 Spanish income tax (gross tax liability).

2. Maximum foreign tax credit:

Under Article 114.2 of the Personal Income Tax Regulations, the credit is limited to 30% of the Spanish tax attributable to the employment income.

€48,000 × 30% = €14,400.

3. Comparison of the two possible credit amounts:

• • a) Foreign tax actually paid: €5,000
  • b) Average Spanish tax rate (24%) applied to the foreign employment income:
    €10,000 × 24% = €2,400

4. The lower amount is €2,400. Consequently, a maximum foreign tax credit of €2,400 may be deducted from the Spanish income tax.

5. Final tax liability:

Spanish income tax: €48,000
– Foreign tax credit: €2,400
= Final Spanish income tax liability: €45,600

Although the foreign tax actually paid (€5,000) is well below the statutory 30% ceiling (€14,400), only €2,400 may be credited because this is the lower of the two amounts prescribed by law.

Summary

• Foreign tax paid cannot be credited in full, but only up to the statutory limits provided by Spanish tax law.
• Even where higher foreign taxes have been withheld, the allowable credit is limited to the lower of the foreign tax actually paid or the amount resulting from applying the average Spanish effective tax rate (24%) to the foreign employment income, subject to the overall ceiling of 30% of the Spanish tax attributable to total employment income.
• Consequently, the application of the Beckham Law does not always eliminate international double taxation completely, and partial double taxation may still occur in certain situations.

Our law firm will be pleased to analyse your individual circumstances, carry out the necessary administrative procedures on your behalf and assist you with the preparation and filing of the relevant Spanish tax returns. Should you require further information or legal advice regarding the Beckham Law or Spanish taxation, please do not hesitate to contact us by email or telephone.

Author:

Christoph Sander
Lawyer and Tax Advisor
CEO, Partner, Director
info@sspartners.es
Tel: (+34) 951 12 13 06
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