Changes introduced to the Impatriate Tax Regime (Beckham Law) – Startups Law

Ley de Startups
Fiscal News

With the recent approval of the Law for the Promotion of the Ecosystem of Emerging Companies, Startups Law, important changes have been introduced in the special tax regime for impatriates, Beckham Law, as of January 1, 2023.

These changes, in line with those already applicable in other countries in Europe, are aimed at simplifying the requirements for the application of the Beckham Law in order to encourage the attraction of talent to our country and dynamize the Spanish economy.

The Beckham Law allows tax residents in Spain to be taxed under the Non Resident Income Tax rules and pay taxes in Spain only on income from a Spanish source at a fixed rate of 24% (or 47% if it exceeds €600,000), therefore, leaving foreign source income (i.e. foreign dividends) and capital gains obtained outside of Spain free of taxes in Spain.

In addition, those who apply the Beckham Law are subject to Wealth Tax  (and now also to the Solidarity of Tax on Large Fortunes) only on the assets and rights located in Spain, so foreign assets would not be subject to any tax in Spain.

The changes introduced by the Startups Law to the Beckham tax regime will allow this regime to be applicable by a greater number of people who, for one reason or another, decide to move to Spain, since it can be applied, as the sector had been demanding since time immemorial, by professionals, businessmen, entrepreneurs and even their spouses.

Thus, as of 2023, the following people may be entitled to apply this regime:

1) Employees posted to Spain who have an international teleworking visa.

2) Directors, even in cases in which they are also shareholders of the Company, with the sole exception of passive-income companies.

3) Entrepreneurs who are going to carry out business activities in Spain to the extent their activity qualifies as “entrepreneurial “. Entrepreneurial shall be understood as that activity that is of an innovative nature with special economic interest for Spain and for this purpose has a favorable report from the competent body.

4) Highly qualified professionals who are going to carry out business activities in Spain providing services to companies classified as “emerging” or who carry out training, research, development, and innovation activities, provided that the remuneration received for this represents more than 40% of the total income from work or economic activities.

5) Finally, the spouse and children, under 25 years of age, or any age in case of disability, providing i) they move to Spain in the same tax period as the Beckham holder or in the following one and ii) the net income from work or business activities may not be higher than the remuneration received by the Beckham holder.

On the other hand, two important requirements will make more flexible the regime with respect to the current status:

1) The number of tax periods during which you cannot have been a tax resident in Spain is reduced from 10 to 5 tax periods.

2) The movement to Spain may occur both in the first year of application of the regime, as well as in the previous one. In our opinion, this will allow those people who have moved to Spanish territory during the financial year 2022 to benefit from the regime.

This new regime, Startups Law, is undoubtedly much more competitive than the current one and allows our country to compete with other neighboring territories. This change, together with other measures related to obtaining residence permits and visas, simplification of bureaucratic procedures and improvement of tax incentives associated with investments in emerging companies, will undoubtedly be decisive elements for the revitalization of our economy in the short term.

If you need more information about the news regarding taxation and the impatriate regime, Beckham Law and Startups Law  do not hesitate to contact us:

Inmaculada Domecq, Partner of the Firm, director of the Tax & Legal area.

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