All Your Questions Concerning The Beckham Rule Answered. David Beckham’s legacy to Spanish ex-pats is more than providing stellar football viewing (he scored five times in his first 16 matches), he also lends his name (unofficially) to a special tax regime known as the Beckham Rule. Passed in 2005, David Beckham was one of the first wealthy foreigners to take advantage of the rule which can still provide tax benefits today.
What is the Beckham Rule?
The current definition of the Beckham Rule can be found in Article 93 of the Personal Income Tax Act which states the rule is a ‘special tax regime applicable to individuals posted to Spanish territory’. Basically, if you acquire tax residence in Spain you can opt to be taxed under the non-resident income tax rules during your first year in Spain and the following five years of your residency.
What are Spain’s Non-Resident Income Tax (NRIT) rules?
Excluding employment income, under the NRIT rules, income and capital gains obtained abroad will not be subject to Spanish taxes. Thus, NRIT is levied only on Spanish-sourced income and capital gains. Any savings will be taxed at the normal tax rate, but employment income will be taxed at lower rates (fixed rate of 24% up to €600,000 and 47% for earnings over €600,000). Capital gains obtained in Spanish territory will be taxed at 35%.
Do I qualify as a tax resident in Spain?
To qualify as a tax resident you must meet one of the below three conditions:
- Spend more than 183 days a year in Spain (these days do not need to be consecutive), or
- Have the core of your economic interests directly or indirectly in Spain, or
- Your spouse or child are habitual residents of Spain.
Are there any conditions attached to the Beckham Rule?
There are several conditions attached to the NRIT rules, including:
- You must have been a non-resident in Spain for five fiscal years (previously this was 10 years).
- Your employment duties must be conducted in Spain. If part of your work must take place outside Spain, the percentage of your income earned from these activities must not exceed 15%.
- You must be employed by a Spanish corporate entity, or for a permanent Spanish subsidiary of a foreign company or be a qualifying entrepreneur, digital nomad, professional, or investor. People moving to Spain to become a director of a Spanish company may also qualify, as may foreign directors of a holding company, according to the terms of the Corporate Income Tax Act, if the direct or indirect stake in such holding is less than 25%
- You must apply to have the NRIT rules applied to your tax obligations within six months of moving to Spain.
The Beckham Rule provides unquestionable tax benefits to foreign nationals relocating to Spain.
Can dependents benefit from the Beckham Rule?
Under changes which came into force on 1 January 2023, your children are entitled to the benefits of the NRIT rules if they are under 25 years. The age limit is not applicable in the case of disabled children. Your spouse is also entitled to utilise the scheme or your unmarried partner if they are the parent of your children.
Below are the conditions benefiting dependents must meet:
- They must relocate to Spanish territory, either at the same time as you or within the first fiscal year
- They must acquire tax residency in Spain as a result of the move.
- They cannot have resided in Spain within the last five fiscal years.
- They receive no income from a Spanish company.
- The sum of their net taxable income is less than yours.
Wrapping up
The Beckham Rule can provide considerable tax advantages for UK residents relocating to Spain, and those with high net worth and/or considerable entrepreneurial and innovative skills will particularly benefit.
Remember that Digital Nomad Visa gives you access to Beckham rule. Our dual-qualified, multi-lingual tax solicitors can advise you on all aspects of the Beckham Rule and other Spanish tax benefits you may qualify for. Please contact us on +44 207 043 0648to make an appointment
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Please note that this article does not constitute legal advice.
