Beckham Law

With the new wording of Art. 93 of the IRPF, which came into force on January 1, the main requirements for a successful application of the regime are two:

• The first requirement is not to have been a tax resident in national territory the last five fiscal years before the Beckham Law application.
• The second requirement is a problematic and casuistic one, since it is necessary to transfer the tax residence to national territory as a consequence of the following reasons:

1. As a consequence of an employment contract. This condition will be understood to be fulfilled when an ordinary or statutory employment relationship is initiated with an employer in Spain. Likewise, this condition will be understood to be fulfilled when the displacement is ordered by the employer and there is a letter of displacement from the employer.
   That is to say, the transfer to national territory will have to be with a new employment contract with a Spanish employer; if it is not a new employer who orders us to move to national territory, a letter of transfer will be obligatory.
2. As a consequence of the acquisition of the condition of administrator of an entity. In the event that the entity is considered an asset-holding entity under the terms provided in Article 5, paragraph 2, of the Spanish Corporate Income Tax Law, the administrator may not have a shareholding in such entity that determines its consideration as a related entity under the terms provided in Article 18 of the Spanish Corporate Income Tax Law 27/2014 of November 27.
   That is to say, the change of residence is due to the obtaining of the condition of administrator of a company. Where it is NOT necessary for it to be a third-party company as long as it is not a patrimonial entity (company where the assets are not subject to any economic activity).
   The change in wording of the article that contains the Beckham Law at the beginning of 2023 allows us to benefit from this opportunity since any person who wants to exercise an economic activity and does it through a company holding the condition of administrator can obtain the approval of the special regime.

The application of the special regime has two advantages over taxation under the general regime:

• The first advantage is that it will only be taxed on national territory for the income obtained in said territory; that is to say, the income obtained outside our territory will be exempt from taxation, and not only for the tax of individuals, but it will also be applied to the wealth tax.
  In addition, it will no longer be mandatory to file the informative declaration on assets and rights located abroad (Form 720).
• The second advantage of the application of the regime is the tax rate of the income obtained in national territory, since the application of the regime allows us to be taxed at a rate similar to that of non-residents.

There are two deadlines to be considered when applying for the Beckham Law.

The first and most important deadline is for the request to exercise the option to be taxed under the aforementioned regime, where it is important to make the request by filling out tax form number 149 and providing the necessary documentation within 6 months following the registration in the Social Security system.

The second deadline to take into account is the resolution of the file. The administration has 10 working days to do so from the submission of the application, but in practice, the deadline is extended to 2 months.

The request to exercise the option to pay tax under the above-mentioned regime must include, among other information, the identification of the worker and the employer or, if applicable, the administrator and the entity, the date of entry into Spanish territory, and the date of commencement of the activity as stated in the registration with the Social Security in Spain or in the documentation that allows, if applicable, the maintenance of the Social Security legislation of origin.

The following documentation shall also be attached:

1. When an employment relationship, ordinary, special, or statutory, with an employer in Spain is initiated, a supporting document issued by the employer is required, stating the recognition of the labor or statutory relationship with the taxpayer, the date of commencement of the activity as stated in the registration with Social Security in Spain, the work center and its address, as well as the duration of the employment contract.
2. In the case of a posting ordered by the employer, a copy of the employer’s letter of posting is required, as is a supporting document issued by the employer stating the date of commencement of the activity as recorded in the registration with the Social Security in Spain or in the documentation that allows, where applicable, the maintenance of Social Security legislation of origin, the work center and its address, as well as the duration of the posting order.
3. In the case of transfers as a consequence of the acquisition of the condition of director of an entity, a supporting document issued by the entity is required, stating the date of acquisition of the condition of director and that the taxpayer’s participation in the entity does not determine the condition of the related entity in the terms set forth in Article 18 of the Spanish Corporate Income Tax Law.

Once the Beckham Law has been accepted, the conditions that gave rise to its approval must be maintained, since noncompliance with any of the conditions determining its application will result in exclusion from said regime. The exclusion will take effect during the tax period in which the noncompliance occurs.

The second tax obligation that you must comply with is to declare your income obtained in national territory through tax form number 151. This annual form is the analogous to the income tax return of the general regime, and the filing period is from April to June.