Understanding Spain’s Beckham Law Explained: A Game Changer for Expats (Foreign workers)
In the last few years, Spain has become a magnet for high-net-worth individuals and professionals looking to capitalize on generous tax breaks. One of the biggest attractions? The Beckham Law is formally known as the Special Expatriate Tax Regime (SETR). This legislation, introduced in 2005, allows qualifying expats to pay a flat tax of just 24% on their income for up to six years. It’s named after footballer David Beckham, who famously moved to Spain and benefitted from this law while playing for Real Madrid. But what exactly does the Beckham Law offer, and is it the right move for you?
Reading this page will help, you understand how to minimise your personal income tax regarding Spanish taxation. Typically, you are charged Spanish tax on your worldwide income. So, how did David avoid all this? Is it just hype?
The Surge in Expats and Financial Perks
Spain is booming as a destination for foreign professionals and wealthy individuals. In 2023, over 500,000 foreigners applied for residency in Spain, with 35% moving for work-related reasons. Thanks to programs like the Golden Visa and Beckham Law, Spain offers a blend of sunny weather, a high quality of life, and significant financial incentives.
Under the Beckham Law, expats pay a flat rate of 24% on their first €600,000 of annual income, compared to Spain’s progressive tax rates, which can reach up to 47%. Even better? Investment income and wealth outside of Spain are not taxed, giving high-income earners a clear financial edge.
Moving from the UK to Marbella
Meet Jane, a successful marketing executive from London who recently took a new role at a global advertising firm based in Marbella. Here’s how she benefits from the Beckham Law as a UK remote worker in Spain:
Step 1: Qualification
Upon receiving her job offer, Jane confirms she meets the primary requirements to qualify for the Beckham Law—namely, that she had not been a Spanish resident in the last 10 years and her new role is with a Spanish company.
Step 2: Application Process
Once settled, Jane works with a tax advisor to apply for the regime within the first six months of her arrival. This is crucial—missing this window could disqualify her from receiving the benefits.
Step 3: Tax Savings
In her first year, Jane earns €300,000 from her new role. Under regular Spanish tax rules, she would pay 47% on most of her income. However, with the Beckham Law, Jane only pays 24%, saving her nearly €69,000.
Step 4: Capitalizing on Other Benefits
Even better, her investment income from her UK portfolio is not taxed in Spain, further protecting her wealth. This tax regime will last for six years, allowing Jane to enjoy Spain’s luxurious lifestyle while keeping more of her income.
You may still need to file UK self-assessment tax returns if you have a rental property as a non-resident. Review the UK & Spain tax treaty to see how your income will be taxed if the Beckham tax law does not work for you.
Moving from California to Madrid
Carlos, an entrepreneur from San Francisco, moves to Madrid to open a European branch of his tech startup. Here’s how the Beckham Law helps him:
Step 1: Determining Eligibility
Carlos checks if he qualifies for the regime. While entrepreneurs can be eligible, Carlos must ensure that the Spanish branch of his company employs Spanish staff, solidifying his status as a Spanish employee rather than a contractor.
Step 2: Structuring Salary for Maximum Savings
Carlos plans to earn €500,000 in his first year. By qualifying under the Beckham Law, he limits his tax exposure to 24% on the first €600,000, whereas without this regime, he could be taxed at 47% for income above €60,000. This results in savings of over €115,000.
Step 3: Managing Foreign Assets
Because the Beckham Law only taxes Spanish income, Carlos enjoys further protection from Spain’s wealth tax. He keeps his Silicon Valley investments intact without reporting or paying taxes on them to Spanish authorities.
It is always worth looking at the US and Spanish double tax treaty to ensure you know how types of income is taxed if the Beckham Law does not work for you. Equally, you may want to know where you pay the most taxes between the US and Spain.
Key Qualifications and How to Apply to reduce Tax
To qualify for the Beckham Law, you must:
- Be newly employed in Spain by a Spanish company or take on a specific role, like a director.
- Have not been a Spanish tax resident in the last 10 years.
- Apply within six months of registering with Spanish Social Security.
The process is complex, but hiring a local tax advisor is recommended to ensure timely application and avoid pitfalls. Official details and applications can be found on Spain’s
Tax Agency website Agencia Tributaria.
What the Beckham Law Doesn’t Cover
Though the Beckham Law provides extensive benefits, it’s not a one-size-fits-all solution. Income from self-employment or freelance work is excluded, so if you’re a digital nomad or freelancer, you won’t qualify. Additionally, after the six-year period ends, expats revert to Spain’s standard tax regime, which can be a sharp increase depending on income levels.
Another limitation is that the Beckham Law does not exempt individuals from paying taxes on income generated in Spain (outside of wages) nor offers relief from property taxes or VAT. Expats investing in Spanish real estate or planning to start businesses should seek separate advice to ensure full tax compliance.
5 Most Common Questions with Explained Answers
Q: Who can benefit from the Beckham Law?
A: Anyone newly employed by a Spanish company who hasn’t been a tax resident in Spain for 10 years.
Q: Can freelancers or contractors apply for the Beckham Law?
A: No, the law only applies to employees of Spanish companies or specific roles like directors.
Q: Does the Beckham Law tax foreign income?
A: No, foreign income, wealth, and investments are not taxed under this regime.
Q: How long does the Beckham Law tax break last?
A: It lasts for six years from the year of application.
Q: What happens after the six years?
A: You revert to Spain’s standard income tax rates, which can reach up to 47%.