Beckham law

The Beckham Law, also known as the Non-Resident Income Tax Law, is a Spanish law that allows high net worth individuals to pay a reduced income tax on their worldwide income, if they meet certain requirements. The law was introduced in 2005 and was named after the famous English footballer David Beckham, who was one of the first high-profile individuals to take advantage of the law when he moved to Spain to play for Real Madrid.

The main requirement to qualify for Beckham law is that at the time of application the individual must be considered non-resident in Spain. This means that they must not have spent more than 183 days in Spain during the tax year, and they must not have their main residence in Spain at the time of application. In addition, the individual must not be considered tax resident in any other country. The application must therefore be made within a 6-month period from moving to Spain.

To prove that they are not resident, individuals must provide evidence of their residence in another country, such as a certificate from the Swedish Tax Agency that you have been resident in Sweden, a certificate from a Swedish employer or other certificate of tax residence from their home country. They should also show that they have not spent more than 183 days in Spain during the tax year. This can be done by providing evidence during any inspections such as flights, hotel bookings and other forms of documentation.

The Beckham Law applies to income earned outside Spain, and it allows individuals to pay a flat rate of 24% on this income, rather than the normal progressive income tax, which can be as high as 47%. The reduced rate applies to all types of income including salary, dividends and capital gains.

There are also some restrictions on the types of income that qualify for the Beckham Law. For example, the law does not apply to income from Spanish companies or from activities deemed to be carried out in Spain. In addition, the law does not apply to certain types of income, such as rental income from Spanish properties, which are subject to normal tax rates.

To benefit from the Beckham Law, individuals must file a special tax return. What to be prepared for is the need to prove permanent income in Spain. The tax return must be filed annually and it must be filed before the end of the tax year. Failure to file the tax return on time can result in fines.

In addition to the flat rate income tax of 24%, individuals taking advantage of the Beckham Law are also subject to Spanish wealth tax. The wealth tax is applied to the individual’s global assets, including property, investments and cash. The wealth tax rate can vary depending on the individual’s assets, but it usually ranges from 0.2% to 2.5%.

The Beckham Law has been controversial in Spain, with some critics arguing that it is unfair to Spanish residents who are subject to higher tax rates. However, supporters of the law argue that it helps to attract high net worth individuals to Spain, which can have a positive impact on the economy.

It is worth noting that in 2010 the Spanish government modified the Beckham Law, increasing the minimum income tax rate from 24% to 24.75% and introducing a ceiling of EUR 600 000 on the amount of income that can be taxed at this reduced rate. This amendment was intended to target high-income earners and to prevent abuse of the law.

In recent years, the Spanish government has tightened the rules of the Beckham Law to prevent tax fraud and to ensure that wealthy individuals pay their fair share of tax. This includes expanding the documentation required to prove non-residency and stricter controls on the 183-day rule.