David’s most beautiful goal in Spain
David goes to Real Madrid …
The arrival of the football player David Beckham to Real Madrid coincided with the introduction of a tax incentive to temporarily allow foreigners (‘foreign talent’) to work in Spain under favorable conditions. The case was highlighted in the press with David Beckham as an example and since then this regulation was and is still also called the ‘Beckham Rule’.
In 2015 the regulation was changed and, ironically, precisely top athletes can no longer use the Beckham Rule anymore. In 2023, the scheme is changed again from the introduced law for start-ups and can be used in more cases and by more people.
A fixed low non-resident rate
The regulation means that if you move to Spain because of work, your income can then be temporarily (max 6 years) taxed at a fixed and relatively low rate of 24% non-resident income tax instead of the progressive table for residents. The 24% rate only applies to active income up to 600,000 euros, above which a 47% rate is applied.
These rates apply to worldwide earned income, so also when part of the work is carried out abroad. The scheme is usually fiscally attractive from a gross salary of around 55,000 euros per year onwards.
Progressive rates for other Spanish passive income such as interest and dividends will be taxed between 19 and 28% from 2023.
Who can benefit from the scheme?
- Employees who have to move to Spain to accept a job. This may involve employment with a Spanish employer or a foreign employer.
- Digital nomads, where the work activity is performed remotely using computer, telematic and telecommunication means and systems.
- Directors of an active Spanish company.
- Entrepreneurs carrying out an innovative business activity of particular economic importance to Spain.
- Highly qualified professionals providing services to start-ups, or engaged in training, research, development and innovation, who receive remuneration that exceeds 40% of the total income from employment and/or profit from business.
The person concerned must not have been a tax resident in Spain in the previous 5 years.
The regulation may also be applied for co-moving married partners and children up to 25 years of age, provided they obtain less income than the person for whom the regulation is applied.
Exemption of foreign assets
Also for wealth tax purposes, one is deemed non-resident so no Spanish wealth tax is due on worldwide possessions, but only on assets located in Spain including, in particular, real estate located in Spain (such as the main home) minus the related debt.
A general exemption of 700,000 euros also applies.
Application and duration of the Beckham Rule
The request to make use of this rule must be submitted within 6 months of the start of the employment relationship. The scheme takes effect during the year of establishment in Spain and continues to apply for the following five calendar years.
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