To qualify for tax benefits under the Beckham Law, individuals must meet income-based eligibility thresholds set by the government.
The Beckham Law, officially known as Spain's special expatriate tax regime, provides tax benefits to qualifying foreign workers who move to Spain. While the law offers significant advantages, particularly a flat tax rate on Spanish income, there are specific financial thresholds and conditions that determine eligibility:
1. Income Threshold
- Annual Earnings Requirement: Initially, the Beckham Law was available to all expatriates moving to Spain, but reforms introduced in 2010 placed restrictions on who could benefit from the law. Now, to qualify for the Beckham Law, an individual’s annual income must not exceed €600,000. If a person earns more than this amount, they are no longer eligible to benefit from the flat 24% tax rate under the Beckham Law and must instead be taxed under the standard progressive tax rates applicable to Spanish residents.
2. Employment Type and Contractual Conditions
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Specific Employment Requirement: The Beckham Law is primarily targeted at foreign professionals moving to Spain for employment purposes. The applicant must have a work contract with a Spanish company or a Spanish branch of a foreign company. Additionally, the law often applies to individuals moving to Spain to take up managerial positions or roles requiring specialized skills that are not easily found within the Spanish labor market.
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Exclusions: The law is not available to self-employed individuals or those earning income through non-Spanish sources. This means that freelancers, consultants, or individuals whose primary income is derived from activities outside Spain are generally excluded from the Beckham Law’s benefits.
3. Residency Requirements
- Residency Status: To benefit from the Beckham Law, the individual must become a tax resident of Spain, meaning they must spend more than 183 days in Spain during the tax year. However, under the Beckham Law, their worldwide income is not taxed in Spain, only the income generated within Spain.
4. Duration of Benefits
- Six-Year Limit: The benefits of the Beckham Law, including the flat 24% tax rate, are available for a maximum of six years. After this period, individuals will be subject to the regular Spanish tax system, which can result in higher tax rates, especially for high-income earners.
Summary
To be eligible for the Beckham Law, an individual must meet the financial threshold of earning no more than €600,000 annually, be employed under specific conditions by a Spanish company, and become a tax resident of Spain. The benefits of the law, including the flat 24% tax rate on Spanish income, are available for up to six years. Self-employed individuals and those with primary income sources outside of Spain are generally not eligible.