The Beckham Law provides tax incentives for foreign nationals moving to Spain for work, with different benefits for non-EU and EU nationals.
The Beckham Law, or Spain's special expatriate tax regime, applies to foreign workers moving to Spain, but it affects non-EU nationals differently than EU nationals in several ways:
1. Eligibility and Application
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Non-EU Nationals: For non-EU nationals, the Beckham Law offers an attractive tax regime, especially when relocating to Spain for employment purposes. Non-EU nationals must obtain a work visa and residence permit to live and work in Spain, and once they meet these immigration requirements, they can apply for the benefits under the Beckham Law. This regime allows them to pay a flat 24% tax on Spanish income up to €600,000 annually for up to six years.
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EU Nationals: EU nationals, on the other hand, do not require a visa to live and work in Spain due to the freedom of movement within the EU. However, this freedom does not automatically grant them the right to benefit from the Beckham Law. EU nationals must still meet the same specific conditions regarding employment, residency, and income as non-EU nationals to qualify for the law's tax benefits.
2. Residency and Tax Obligations
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Non-EU Nationals: Non-EU nationals who qualify under the Beckham Law are treated as tax residents of Spain but are only taxed on their Spanish-sourced income at the favorable flat rate. Their worldwide income remains outside the scope of Spanish taxation during the six-year period of the Beckham Law. However, they must ensure they meet the residency requirement (spending more than 183 days in Spain per year) to maintain their status under the Beckham Law.
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EU Nationals: EU nationals can move freely within the EU, but if they wish to benefit from the Beckham Law, they must also become tax residents of Spain and meet the same residency criteria as non-EU nationals. The primary difference is that EU nationals already have the right to live and work in Spain without needing to secure a visa or work permit, simplifying their move but not their tax obligations.
3. Impact of Double Taxation Agreements
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Non-EU Nationals: For non-EU nationals, double taxation agreements between Spain and their home country can affect how their global income is treated. While the Beckham Law limits taxation to Spanish income, they may still be liable for taxes on their worldwide income in their home country, depending on the tax treaty in place. It’s crucial for non-EU nationals to understand these treaties to avoid double taxation.
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EU Nationals: EU nationals, especially those from countries with closer tax coordination with Spain, might find it easier to navigate double taxation issues. However, the Beckham Law’s benefits are largely the same regarding Spanish income, and their global income is also not taxed in Spain during the benefit period.
Summary
The Beckham Law affects non-EU and EU nationals differently, primarily in terms of eligibility, residency requirements, and the need for work visas. Non-EU nationals must secure visas and residence permits to work in Spain, whereas EU nationals benefit from freedom of movement. Both groups, however, must meet the same financial and residency conditions to take advantage of the Beckham Law’s tax benefits. Additionally, double taxation agreements may play a significant role in how the law impacts non-EU nationals, particularly concerning their global income.