Beckham’s Law Explained: How Digital Nomads Can Save on Taxes in Spain

Spain has become an attractive destination for digital nomads, not only for its vibrant culture and pleasant climate but also due to favourable tax policies like the Beckham Law. This legislation offers significant tax advantages to foreign professionals relocating to Spain. In this article, we’ll delve into the specifics of the Beckham Law, its benefits, and how it applies to expatriates. 

Enacted in 2005, the Beckham Law—officially known as the Special Expatriate Tax Regime—was designed to attract foreign talent to Spain. It allows eligible individuals to be taxed as non-residents, applying a flat tax rate on Spanish-sourced income while exempting most foreign income from Spanish taxation. 

• Flat Tax Rate: Beneficiaries are taxed at a flat rate of 24% on Spanish-sourced income up to €600,000, with income above this threshold taxed at higher rates. 

• Exemption on Foreign Income: Most foreign income, including dividends and interest from non-Spanish sources, is exempt from Spanish taxation under this regime. 

• Wealth Tax Exemption: Expatriates are exempt from paying wealth tax on assets located outside of Spain during the first five years of residency. 

• Simplified Tax Filing: The regime offers simplified tax filing procedures, making it easier to comply with Spanish tax regulations. 

To qualify for the Beckham Law, individuals must: 

• Relocate to Spain: The individual must become a tax resident in Spain due to employment or professional reasons. 

• Non-Residency in Previous Years: The applicant should not have been a tax resident in Spain during the five tax years prior to the move. 

• Employment Relationship: There must be an employment contract with a Spanish company or a foreign company with a permanent establishment in Spain. 

• Application Deadline: The application must be submitted within six months from the start of the employment activity in Spain. 

The favourable tax treatment under the Beckham Law applies for a period of six years, including the year of arrival and the following five years. 

To apply for the Beckham Law regime: 

1. Obtain a Spanish Tax Identification Number (NIE): This is required for tax purposes in Spain. 
2. Submit Form 149: This form is used to request inclusion in the special tax regime. 
3. Provide Necessary Documentation: This includes proof of employment, confirmation of non-residency in Spain for the previous five years, and other relevant documents. 

It is advisable to consult with a tax professional to ensure compliance with all requirements and deadlines. 

With the introduction of Spain’s Digital Nomad Visa in January 2023, remote workers have a pathway to reside in Spain while benefiting from the Beckham Law. This visa allows non-EU citizens to live in Spain for up to five years while working remotely for non-Spanish companies. 

• Income Requirements: Applicants must demonstrate a minimum gross income from foreign employment, typically around €31,752 annually. 

• Physical Presence: Visa holders must reside in Spain for at least 183 days per year to maintain tax residency. 

• Social Security Contributions: Arrangements can be made to continue paying social security contributions in the home country, allowing access to public healthcare in Spain without the need for private health insurance. 

The Beckham Law offers substantial tax benefits for expatriates and digital nomads considering a move to Spain. By providing a flat tax rate on Spanish income and exemptions on foreign income and wealth tax, it creates a favourable financial environment for foreign professionals. However, navigating the application process and meeting eligibility criteria can be complex, so seeking advice from tax professionals is highly recommended to fully leverage these benefits. 

At Co-gency, we specialise in helping digital nomads, expatriates, and professionals navigate international tax complexities. If you’re considering the Beckham Law and need expert advice tailored to your situation, contact us today for a consultation.