The Beckham Law in Spain, also known as the "Impatriate Regime," offers foreign workers a flat tax rate of 24% on their income when relocating for employment.
The Beckham Law is a special tax regime in Spain designed to attract highly skilled foreign professionals to the country by offering them favorable tax conditions. Officially known as the "Special Expatriate Tax Regime," the law was introduced in 2005 and is informally named after the famous English footballer David Beckham, who benefited from it when he moved to play for Real Madrid.
Key Features of the Beckham Law:
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Favorable Tax Rate:
- The law allows qualifying expatriates to pay a flat tax rate of 24% on their Spanish-sourced income, up to €600,000 annually. Income exceeding this threshold is taxed at 47%, which aligns with Spain's highest tax bracket under the regular tax system.
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Exemption on Foreign Income:
- Under the Beckham Law, expatriates are taxed only on income earned in Spain. This means that foreign-sourced income, such as earnings from investments or businesses outside Spain, is generally exempt from Spanish taxation during the period it is covered by the regime.
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Duration:
- The tax benefits under the Beckham Law are available for a maximum of six years. After this period, expatriates revert to the standard Spanish tax system, where they are taxed on their worldwide income at progressive rates.
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Eligibility:
- To qualify for the Beckham Law, individuals must be employed by a Spanish company or a Spanish branch of a foreign company, and must not have been tax residents in Spain for the 10 years prior to their application. Professional athletes were initially eligible, but reforms in 2010 excluded them from the regime.
Purpose:
The primary purpose of the Beckham Law was to make Spain an attractive destination for international talent, particularly in sectors such as finance, technology, and sports, thereby boosting the country’s global competitiveness and stimulating economic growth.
In summary, the Beckham Law offers significant tax advantages to expatriates working in Spain, making it an appealing option for high-income professionals relocating to the country.