What is Beckham law and how to take advantage of it?

Beckham law was approved in 2005 but not all foreigners who move to Spain know about it and or are familiar with the advantages they can take from it. If you are an Expat in Spain and came to work to this country, you might be interested in knowing what it is about. In this article we will try to explain how you can apply for this law and what are the requirements that one has to fulfill in order to be authorized and access it.

Before moving to a foreign country, it is very important to get informed about all the laws and regulations that can affect your working or everyday life. This knowledge can prevent you from uncomfortable situation or offer you the benefits that you were not able to enjoy in your home country. One of the laws that affect all the foreigners who move to Spain is a Beckham law and its favorable tax regime.

What is the Beckham law?

The Beckham law allows the foreigners to take advantage of a special income tax regime by being taxed as non-residents for first 6 years of their residence. As a result, instead of paying 45-48% of tax the foreigners are only subject to 19.5% (in some cases 24%) tax rate. Being authorized by this law allows a foreigner to save some money for larger investments without this implying significant tax payment or set up of a new business with the benefit of this favorable tax regime. It is very important to note, that higher your income is, more money you can save of tax.

Why is this law called Beckham law?

The original name of this law is attributed to a former player of Real Madrid, one of the main football Spanish teams, David Beckham. He was the first one to take advantage of this law when he moved to this country and since them more and more football players and foreign investors apply to access this law. Even though this law can be applied to a majority of the foreigners who move to the territory of Spain, there are still some very important requirements that one should fulfill in order to benefit from it fully.

Requirements for Beckham law

  • The first and the most important requirement that one should comply with is moving to Spain with working contract or a plan to register a new company.
  • The second requirement is not having been a resident in Spain during last ten years before the day apply for a Beckham law. Otherwise, you will have to wait for these 10 years to pass in order to be authorized by tax authorities.
  • The third condition is that prior to the application as a resident you must not have generated any income in any form of business on the territory of Spain.

If you comply with these three requirements you can apply for a Beckham law with a right to be authorized.

How to apply for Beckham law?

In order to apply for a Beckham law, one has to go to Public Treasury to request and fill in a model 149. Along the first year of your residence in Spain when you have to present annual tax returns you apply for a favorable tax regime by filling in a model 151. It is recommendable to go through this process during the first year of your residence in Spain, however, you can do it any moment during following 5 years.