Beckham Rule Spain

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David goes to Real Madrid …

The arrival of the football player David Beckham to Real Madrid coincided with the introduction of a tax incentive to temporarily allow foreigners (‘foreign talent’) to work in Spain under favorable conditions. The case was highlighted in the press with David Beckham as an example and since then this regulation was and is still also called the ‘Beckham Rule’.

In 2015 the regulation was changed and, ironically, precisely top athletes can no longer use the Beckham Rule anymore.

A fixed low non-resident rate

The regulation means that if foreigners (non-Spaniards) are employed in Spain, their income can then be temporarily taxed at a fixed and relatively low rate of 24% instead of the progressive table for residents.

The reduced rate only applies to incomes up to 600,000 euros, above which the national or local top rates will be applied.

These rates apply to all income, even if part of the work is carried out abroad.

Conditions

To qualify for the Beckham Rule in Spain, the following basic conditions apply:

1. The person in question has not been a resident in Spain in the previous 10 years;
2. The emigration to Spain is the result of accepting a job for which it is necessary that he / she moves to Spain (and this is recorded in a statement drawn up by the employer).

The Beckham Rule can also be applied to persons coming to Spain in the capacity of director of a Spanish company, with the condition that this director does not own more than 25% of the share capital.

Top athletes coming to Spain are, as stated before, since 2015 expressly excluded from this regulation.

Application and duration of the Beckham Rule

The request to make use of this rule must be submitted within 6 months of the start of the employment relationship. The scheme takes effect during the year of establishment in Spain and continues to apply for the following five calendar years.

Income relating to the period prior to moving to Spain is not subject to taxation in Spain, unless Spain has made different arrangements with the country where the employee lived prior to the move.

The same regulation applies to the income after termination of the employment contract. This income is free from Spanish income tax in the relevant tax year, provided that the end of the employment contract is notified to the Spanish Tax Authorities within one month of departure from Spain.