What are the benefits of the Beckham Law?

Spanish Tax Residents pay taxes at a progressive tax rate from 19% to 47% on their worldwide income. In contrast, Non-Spanish Tax Residents - and therefore those having gained Non-Spanish Tax Resident status under the Beckham Law - pay taxes at a flat rate of 24 % up to the amount of 600,000 Euros and of 45% thereafter on their Spanish income, leaving any income gained outside Spain to be levied at the corresponding foreign jurisdiction.

 

Employment or work-related income is deemed to be obtained in Spain when working remotely from Spain, despite the employer or paying party being located outside Spain.

 

Is Spanish Wealth Tax payable by taxpayers who pay taxes under the Beckham Law?

In those Spanish regions where wealth tax has not been abolished, this is levied on the assets held by the taxpayer at 31 December, the accrual date, provided that the net value of the taxpayer's assets exceeds 700,000 Euros.

 

Spanish tax residents are subject to wealth tax on their worldwide net assets, whereas non-Spanish tax residents - and therefore those who have obtained non-Spanish tax resident status under the Beckham Law - are subject to wealth tax only on their assets located in Spain.

 

In this regard, it should be noted that for the tax period 2022 onwards, shareholdings which at least 50% of the total assets of the company consists, directly or indirectly, of properties located in Spain, are subject to wealth tax.

 

What are the enhancements that the Spanish Start-Up Law introduces to the Beckham Law?

1. Tax exemption for remuneration in kind.

    

   Under the former redaction of the Beckham Law, only taxpayers paying taxes as Spanish tax residents, were able to exempt tax on certain income received as remuneration in kind. However, under the new redaction of the Beckham Law pursuant to the amendments introduced by the START-UP LAW, such exemption is extended to non-Spanish tax residents and, therefore, to those within the scope of the Beckham Law.

    

   An example of remuneration in kind that is exempted is the payment of the employees' children tuition.

 

2. Extending the scope of its application.

    

   The START-UP LAW extends the scope of the application of the Beckham Law, allowing Digital Nomads, Highly Qualified Professionals, and those who provide services in the fields of research an innovation, paying taxes under the Beckham Law regime, provided they meet certain requirements.

    

   In addition, the START-UP LAW also extends the scope of the application of the Beckham Law regime to the taxpayer's family members.

 

3. The requirement of not having been Spanish resident prior to applying for the Beckham Law tax regime is reduced from 10 to 5 years.

Who is eligible to apply for the Beckham Law Tax Regime?

1. Professionals relocated to Spain because of an employment contract.

 

2. Company’s director.

    

   This special tax regime continues to apply to those who relocate to Spain because of being appointed Director of a company. However, whereas under the former redaction of the Beckham law the director was required not to participate in the company (nor to hold shares), or if they were could not be deemed to be connected to that company, according to the criteria established in Article 18 of the Spanish Corporate Tax Act, under the new redaction this limitation is now removed unless the company is a real estate holding company.

 

3. Those who have obtained a Spanish Digital Nomad Visa.

 

4. Professionals relocated to Spain to carry out an activity qualified as entrepreneurial according to Article 70 of the Supporting of Entrepreneurs and their Internationalization Law.

 

5. Highly qualified professionals relocated to Spain to provide services to Start Ups certified as innovative by ENISA.

 

6. Professionals relocated to Spain to provide services in the fields of research development and innovation, provided the income they receive from those activities exceeds 40 % of their total income.

 

7. Taxpayer’s family members.

    

   Under the former redaction of the Beckham Law, family members of the main taxpayer who pay taxes benefitting from the Beckham Law regime, could not benefit from it. Under its new redaction introduced by the Start-Up Law, the spouse and the children (under 25) of the said main taxpayer, as well as any disabled dependants regardless of age, can pay taxes under the Beckham Law regimen, so long they meet certain requirements.

When can a taxpayer apply for the Beckham Law regime?

The deadline to apply for the Beckham Law is established by the following rules:

 

Transitional provision: Deadline 16th of June 2024.

 

On 5th of December of 2023, the Spanish Government enacted the Royal Decree 1008/2023, which provides for a transitional provision enabling to those individuals who became Spanish resident for tax purposes in 2023, as a result of relocating to Spain in the said year or in the precedent second semester of 2022, to apply for paying taxes under the Beckham Law rules provided their application is submitted by 16th of June 2024.

 

Those taxpayers who moved to Spain because of an employment contract or after obtaining a Spanish digital nomad visa, can apply for the Beckham Law regime within 6 months from the date that the activity to be carried out in Spain, is registered at the Spanish social security system or in the documentation that allows the foreign Social Security to be maintained.

 

If there is no obligation to register with the social security system, the 6-month period is counted from the date of commencement of the activity.

 

Professionals who relocated to Spain to carry out an activity qualified as an entrepreneurial activity according to Article 70 of the Supporting Entrepreneurs and their internationalization Law, can apply for the Beckham Law regime within 6 months from the date they entered Spain.

 

Written by Laura Gallego Herráez

 

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Scornik Gerstein LLP is a fully UK regulated firm (SRA’s registration number 565232) with £3 million professional negligence cover for our client’ peace of mind.

 

It then developed on common law jurisdictions and mainly for the purposes of wealth protection, succession planning and tax mitigation.

 

During the 20th century, offshore trusts gained popularity due to the additional layer of privacy or protection provided to assets from creditors or former spouses.

 

Basics of a Trust

• It creates a legal fiction consisting in distinguishing legal ownership from beneficial ownership.
• The trustee participates and manages the assets entrusted to him on behalf of the trust and for the benefit of the beneficiaries.
• Trust's assets are not part of the trustee’s own property.
• Trust's assets may include any type of asset, including cash, securities, real estate, or life insurance policies.
• A trust can be created either for an individual or a company.
• A trust must have beneficiaries who are identifiable individuals, except a charitable trust, which can have a general purpose such us alleviating poverty.

 

Main aim of a Trust

As above indicated, the main aim of setting up a trust is to protect assets and ensure financial security, it is a useful tool to facilitate planning succession and provide tax efficiency.

 

The United Kingdom jurisdiction provides a legal framework that allows individuals and companies to set up a wide variety of different trusts, which can be tailored to the settlor’s particular circumstances to maximize the advantages they provide.

 

At Scornik Gerstein LLP we can assist you to create the trust that best suits your needs.

 

Written by Laura Gallego Herráez.

 

Who is elegible to apply for spanish nationality under the Grandchildren law?

1. Children and grandchildren of of Spanish mother, father or grandparent who are considered, under the Spanish regulation, originally Spanish.

 

2. The daughters and sons of Spaniards whose nationality of origin was recognised by virtue of the right of option in accordance with the Historical Memory Law (Seventh Additional Provision of Law 52/2007 of December 26) or of the present Democratic Memory Law.

 

3. Spaniards born outside of Spain to Spanish women who lost their Spanish nationality by marrying a foreign citizen before the entry into force of the Spanish Constitution of 1978.

 

Finally, this law has provisions for those who are already spanish nationals and would like to upgrade their nationality to a Spanish nationality for a of origin. If you have a Spanish birth certificate, it would be worth it to review the marginal notes about how you obtained your Spanish nationality to confirm if you are eligible.

 

Scornik Gerstein LLP has successfully assisted Spanish descendants in the process to reclaim their Spanish nationality under this law. If you would like to assess your circumstances, please contact us.

 

How to obtain the license in Spain?

It would be necessary to register with the Bank of Spain as a provider of virtual currency exchange services for fiduciary currency and as a custodian of electronic purses.

 

How is the license application submitted?

There are three possibilities:

1. Electronic: its use is mandatory for companies and recommended for individuals. The necessary documentation is submitted electronically through the Electronic Registry of the Bank of Spain.
2. By mail: recommended for individuals. The necessary documentation must be addressed to the Bank of Spain.
3. In-person: only for individuals. The necessary documentation can be submitted at the General Registry of the Bank of Spain.

What documentation must go in with the application?

1. AML policy.
2. Risk analysis policy.
3. Application form for providers of currency exchange services.
4. Application form for Custody Change Service Providers.
5. Self-employed certificate (this only applies to individuals).
6. Assessment form suitability for service providers of exchange of virtual currency for fiduciary currency and custody of electronic wallets.
7. Criminal record.
8. Identity documents.

Resolution deadline

Once the application has been submitted, the Bank of Spain has a period of 3 months to resolve from the receipt of said application.

 

If any deficiency is detected in the application the Bank of Spain will make a further request for correction or for additional necessary documentation or information, which must be provided within the term provided as otherwise the application will be rejected.

 

Written by Pilar García Fernández.

 

Read more about Corporate & Commercial.

 

When does an individual become a Spanish Resident for Tax Purposes?

It should be noted that the rules that apply to consider whether an individual is Spanish resident for tax purposes are not linked to those that apply to determine the emigration status of an individual.

 

Individuals who either spend 183 days or more in Spain during a calendar year or their main base or centre of activities or economic interests in Spain will be deemed Spanish Tax resident and unless proven otherwise, takes place when the spouse and underage dependent children’s taxpayers permanently reside in Spain.

 

However, this test normally applies as a tie breaker rule, when it is necessary to interpret a double taxation agreement between two countries, to conclude in which country the taxpayer must pay their taxes.

 

What are the benefits that the Beckham Law provides?

Spanish Tax Residents pay taxes at a progressive tax rate from 19% to 47% depending on the amount of their worldwide income.

 

In contrast, Spanish non-tax residents - and therefore those within the scope of the Beckham Law - will pay taxes at a flat rate of 24% up to the amount of 600,000 Euros. If this is exceeded, a fixed rate of 45% will be triggered. However, this will only apply to Spanish income, leaving any income generated outside Spain to be levied at the corresponding foreign jurisdiction, except for employment income, which would be deemed to be obtained abroad in Spain where the taxpayer works remotely.

 

What are the enhancements that the Spanish Start-Up Law introduces to the Beckham Law?

The enhancements to the Beckham Law introduced by the Spanish Start-Up Law are the following:

1. Tax exemption for remuneration in kind.

    

   According to the previous legislation, only the taxpayer who pays taxes as a Spanish tax resident, was able to exempt tax on the income received as a remuneration in kind. However, following the amendments made by the START-UP LAW that exemption is extended to non-Spanish residents – and therefore those within the scope of the Beckham Law

 

2. Extending the scope of its application.

    

   The START-UP LAW extend the scope of the application of the Beckham Law, allowing to Digital Nomads, Highly Qualified Professionals, and those who provide services in the fields of research an innovation, pay taxes under this regime, provided they meet certain requirements.

    

   In addition, the START-UP LAW also extend the scope of the application of the Beckham Law regime to the taxpayer's family members.

 

3. It reduces the tax period in which the taxpayer has not been Spanish tax resident.

    

   The regime can be applied if the taxpayer was not a Spanish tax resident during the 5 years preceding the taxpayer’s relocation to Spain (as opposed to the preceding 10 years period previously required).

Who is eligible to apply for the Beckham Law Tax Regime?

1. Professionals relocated to Spain because of an employment contract.

 

2. Company’s director.

    

   This special tax regime continues to apply to those who relocate to Spain because of being appointed Director of a company.

    

   However, according to the previous legislation, the director was required not to participate in the company (nor to have shares), or if they were participating in the company cannot be deemed to be connected to that company, according to the criteria established in Article 18 of the Spanish Corporate Tax Act. This limitation is removed unless the company is a real estate holding company.

 

3. Professionals who work remotely, also known as “digital nomads”.

 

4. Professionals relocated to Spain to carry out an activity qualified as an entrepreneurial-activity according to Article 70 of the Spanish Law called supporting entrepreneurs and their internationalization.

 

5. Highly qualified professionals relocated to Spain to provide services to Start Ups.

 

6. Professionals relocated to Spain to provide services in the fields of research development and innovation and the income received from those activities represents more than 40 % of their income of the taxpayer.

 

7. Taxpayer’s family members.

    

   According to the previous legislation, family members of the main taxpayers who pay taxes and the Beckham Law regime were outside of the scope of this law.

    

   However, the Spanish Start-Up Law establishes that the spouse and the children of the taxpayer, who are under 25 years old, as well as any disabled dependants regardless of age can pay taxes under the Beckham Law rules, so long they meet certain requirements.

If you want to be updated about this topic, send an email to london@scornik.com and you will receive the latest news.

 

Written by Laura Gallego Herráez.

 

Read more about Taxation.

 

How long can I stay in Spain with the DNV?

DNV holders can stay in Spain for up to 5 years.

 

Does the DNV include family members?

Yes, foreign nationals who benefit from the DNV, can bring to Spain their spouse and children under 18 and over 18 provided that the applicant is able to show that they are still financially dependent on the applicant (for example, the children are in their university studies or suffer from any mental or physical incapacity that prevent them from making a living for themselves).

 

Where should Digital Nomads pay their taxes?

Digital nomads can pay their taxes either as Spanish tax residents or as a non-Spanish tax residents (under the so called Beckham Law). The “Beckham Law” consists of an optional special tax regime that enables foreigners who move to Spain to pay their income tax as non-Spanish residents, despite becoming de facto tax residents.

 

Spanish tax residents pay taxes at a progressive tax rate from 19% to 47% depending on the amount of their worldwide income. In addition, depending or their place of residence, they are liable for the Wealth Tax (Impuesto sobre el Patrimonio) or the new tax of the Great Fortunes (Impuesto de las grandes fortunas) whereby by a flat 1,7% is applied to their worldwide assets worth betwen 3 and 5.3 millions of euros; 2,1% to assets valued between 5,3 and 10,6 millions of euro, and of 3,5% to assets valued in excess of 10,6 millions of euro.

 

In contrast, Spanish non-tax residents - and therefore those within the scope of the Beckham Law - will pay taxes at a flat rate of 24% of their employment or professional gains made up 600,000 Euros and of 45% for any amount above. Any other income not raised within Spain will be outside the taxable scope. In addition, they will not be liable for the Wealth or Great Fortune Tax on their assets located outside Spain.

 

It should be noted that if the taxpayer is under this special tax regime, double taxation agreements will not apply. Therefore, to consider which system (resident or non-resident) benefits the most, it is necessary to assess the circumstances of each case.

 

If you want to be updated about this topic, send an email to london@scornik.com and you will receive the latest news.

 

Written by Laura Gallego Herráez.

 

Read more about Immigration.

 

Spanish Digital Nomad Visa:

1. Who qualifies for the Spanish nomad visa?
2. Where must a digital nomad working from Spain pay its taxes?

Tax Incentives:

1. What tax reliefs are available when investing in Spanish start-ups?
2. During how many tax periods could I benefit from those tax incentives?
3. Which companies qualify for the tax incentives provided by SUL?

Enhancement of Beckham Law:

1. Who qualifies for the so-called Beckham tax regime?
2. Can a Spanish Nomad Visa holder apply for the so-called Beckham tax regime?
3. When this special tax regime must be applied for?

Benefits for Investors:

The requirements for investors investing in start-ups that will not reside in Spain are simplified, as they will no longer require obtaining a foreigner identity number (NIE); and the company incorporation process is eased, and for specific cases, lower notary and registry fees would apply.

1. How to set up my company through the new online system that Start-up Law provides?
2. How to apply to NIF through this new system?

This new legal hub not only redefines the way legal services are delivered, it also provides value to its users by providing free access to publications explaining the changes brought by SUL. If you are interested in receiving the said publications, send us an email to london@scornik.com

 

Spanish Wealth Tax

Spanish Wealth Tax is payable by individuals; (companies are not subject to wealth tax). This tax applies to both Spanish and non-Spanish tax residents. However, while Spanish tax residents pay wealth tax on their worldwide net assets (i.e. total assets minus total liabilities), non-Spanish tax residents only pay wealth tax on their net assets located within Spanish territory.

 

Pursuant to Spanish national legislation, the tax rate that applies ranges from 0.2% to 3.5% depending on the total value of the net assets of the taxpayer above €700,000.

 

However, the government of each Spanish Autonomous Community can either apply, the national law or pass its own laws on the following:

• Deductions and tax rebates.
• Tax-free allowances.
• Levied tax rate.

Using that legislative capacity, the regional Government Council of Andalusía has approved the abolition of the wealth tax within its regional territory.

 

Solidarity Wealth Tax

This is a temporary tax, which will apply during 2023 and 2024 and it will be reviewed before ending 2024.

 

Individuals whose net assets worth more than EUR 3 million will be subject to the solidarity wealth tax as follows:

 

APPLICABLE RATE	NET OF WORTH ASSETS
1,7%	Between EUR 3 and 5 million
2,1%	Between EUR 5 and 10 million
3,5%	More than EUR 10 million

 

Non Spanish tax residents and those residing on a region where wealth tax has not been scrapped, the amount paid on account of the wealth tax will be deductible from the amount due on account of the solidarity tax.

 

Written by Laura Gallego Herráez.

 

Read more about Taxation.

 

What is the (so called) “Beckham Law”?

The “Beckham Law” consists of an optional special tax regime for those inpatriates who move to Spain allowing them to pay their income tax as non-Spanish residents (despite becoming de facto tax residents) and, depending on their income and circumstances, pay lower tax in comparison to Spanish tax residents (STR).

 

STR pay taxes at a progressive tax rate from 19% to 47% depending on the amount of their worldwide income.

 

In contrast, Spanish non-tax residents (SNR) – and therefore those within the scope of the Beckham Law - will pay taxes at a flat rate of 24% up to the amount of 600,000 Euros. If this is exceeded, a fixed rate of 45% will be triggered. However, this will only apply to Spanish income, leaving any income generated outside Spain to be levied at the corresponding foreign jurisdiction, with the exception of employment income, where income obtained abroad is also taxed in Spain.

 

Dividends, interest, and capital gains generated in Spain are taxed at a rate ranging from 19% to 23%.

 

However, if the taxpayer is under this special tax regime, double taxation agreements and some deductions will not apply. Therefore, to evaluate which system benefits most to each taxpayer it is necessary to assess the circumstances of each case.

 

Requirements to be elegible under the Beckam Law: amendments proposed by the Spanish Start-Up Bill.

In order to be eligible to apply to this special regime, the taxpayer must have relocated to Spain as a result of an employment contract in Spain or being appointed as a director of a Spanish company where the taxpayer does not hold any shares or otherwise - and again depending on each case - there is certain connexion between the companies. However, and this is a relevant modification introduced by the SUB, if the taxpayer is appointed as a director of a Spanish start-up company, he can apply to this special regime, regardless of his stake in the share capital of the said entity.

 

In addition, the SUB extends the scope of this special tax regime to those who work remotely, also known as “digital nomads”.

 

Also, the taxpayer must not derive income through a permanent establishment of a foreign company in Spain as it is established by the current legislation.

 

The qualifying period to apply for this regime will drop from the - currently - 10 years in which the taxpayer has not been deem to be STR previously to applying to the special regime, to 5 years.

 

According to the current legislation, family members of the taxpayer who is registered with the Spanish tax authorities within this special regime are outside of its scope. However, the SUB, establishes that the spouse and the children of the taxpayer, who are under 25 years old, as well as any handicapped dependents regardless of age can pay taxes under the Beckham Law rules, as long as they meet the following requirements:

1. Family members must relocate together with the taxpayer or a later date within the first year in which the special regime applies.
2. They must not have been tax residents in Spain for the five years prior to relocation.
3. They must not derive income through a permanent establishment in Spain.

The total taxable income of all the family members for each tax year in which the inpatriate’s tax regime applies cannot exceed the taxable income of the tax payer (600,000 Euros) that has relocated to Spain. The purpose of this rule is that when the relocated tax payer is the main source of income for the family, only then may the other family members benefit from this regime.

 

If you want to be updated about this topic, send an email to laura.gallego@scornik.com and you will receive the latest news.

 

Written by Laura Gallego Herráez.

 

Read more about Taxation.