Beckham law tax benefits for expat workers in the Basque Country

Beckham law tax benefits for expat workers in the Basque Country. Thanks to its unique fiscal system under the Basque Economic Agreement (Concierto Económico Vasco), the Basque Country allows Bizkaia, Gipuzkoa, and Álava to manage and collect their own taxes. This system offers flexibility and proximity in tax administration and provides substantial fiscal incentives to attract businesses and highly qualified professionals. As an economically advanced region with a strong industrial base and a focus on innovation, the Basque Country is an ideal destination for professionals and investors alike.

One of the most attractive fiscal tools for those relocating to the region is the Special Tax Regime for Expatriates, commonly called the “Beckham Law.” This regime provides significant tax benefits for highly skilled workers moving to Bizkaia, Gipuzkoa, or Álava. Below, we explain the requirements and benefits of this regime and key differences between the provinces.

Requirements to Apply for the Regime

1. Prior Tax Residency: The applicant must not have been a tax resident of Spain for five years before relocating to the Basque Country.
2. Qualified Work:
   • The work must be related to research and development, scientific, technical, financial, or commercial activities.
   • In Bizkaia and Gipuzkoa, management, organisation, and financial control activities are also considered qualified​).
   • In Álava, however, management activities are not included as qualified work​.
   • Workers must belong to Group 1 of the Social Security System or an equivalent professional group.
3. Investment in Innovative Entities (Specific to Gipuzkoa):
   • Expatriates can apply for this regime if they invest in newly created innovative entities.
   • The investment must be made within two years of the expatriate’s relocation, either by founding the entity or acquiring shares in the primary market.
   • The expatriate must also be personally involved in the entity as an employee, director, or administrator​.
4. Creation of Venture Capital Companies or Funds (Specific to Gipuzkoa):
   • The regime is also available if the expatriate establishes a venture capital company or fund within two years of relocation.
   • The expatriate must serve as a senior executive in the managing entity of the venture capital fund or company​.
5. Employment with a Spanish Entity:
   • The expatriate must work for a Spanish or foreign company with a permanent establishment in Spain. This is a mandatory condition unless the person is self-employed.
   • The work may be performed remotely (telecommuting), provided these employment conditions are met​.
6. Self-Employment: The regime is also available for self-employed individuals.
7. Duration of the Regime: The regime can be applied for 11 years (the year of moving plus the following ten years).
8. Flexible Application: There is no specific deadline to apply for the regime during the year. You can decide to apply it in any year within the 11 years, and it can be applied intermittently, skipping years if desired, as long as you remain within the eligible timeframe​.

Tax Benefits

1. Exemption on Employment Income:
   • In Bizkaia and Gipuzkoa, 30% of gross employment income from qualified work is exempt from taxation.
   • In Álava, the exemption is 15%​.
2. Deduction of Moving Expenses: In all three provinces, up to 20% of gross income can be deducted for moving and relocation expenses, provided they are properly documented.
3. Exemption on Foreign Assets:
   • Foreign assets are excluded from the Wealth Tax calculation. Only assets located in Spain are included when calculating the Wealth Tax and the new Solidarity Tax on Large Fortunes. This exemption applies not only to the expatriate worker but also to their spouse and dependent family members​.
4. Exemption on Foreign Income:
   • Income derived from foreign assets is exempt from taxation, provided it has been taxed in the country of origin under a similar tax system.
   • This exemption also extends to spouses and descendants who acquire residency in the Basque Country due to the expatriate’s move, as long as they meet the same conditions​.

The Basque Country is an economically competitive and innovative region and offers significant tax benefits to those who relocate to work in Bizkaia, Gipuzkoa, or Álava. Whether you are a highly qualified professional or represent a company looking to expand, relocating to Euskadi can lead to substantial tax savings.

Contact us to learn how we can help you make the most of the special tax regime available for expatriates.