What is the Beckham Law?

It is not difficult to have heard of the Beckham Law on more than one occasion, even if you do not follow football or legislative news, as the controversy surrounding this law when it was passed was considerable.

Here we explain what the Beckham Law is, what changes it has undergone since 2004 and who is now eligible for it.

What is the Beckham Law?

The Beckham Law, also known as the Special Regime for Posted Workers, is a tax law that was passed in Spain in 2004 to boost the national economy by attracting managers and qualified personnel from abroad. Its original name comes from the surname of the famous English footballer David Beckham, who was one of the first to benefit from this law.

Aims and Purposes of the Beckham Law

The incentive was that, by taking advantage of this regime, posted workers who changed their tax residence to Spain would receive a reduction in their personal income tax. Specifically, it allowed them to be taxed as non-residents at the general rate of 24% instead of 43%.

Initially, the intention was to attract highly qualified professionals from a variety of fields, not only from the sporting sphere. However, the law found a significant welcome in the football world, as it allowed Spanish clubs to sign internationally renowned players at a considerable tax saving.

What started as an idea to attract brains from all over the world became a perfect formula for Spanish football clubs to sign the best players in the world as, with this law, their taxes would be much lower than in other countries with a football tradition.

It was popularly known as the Beckham Law because one of the first to take advantage of it was the English star.

Reforms and Changes to Beckham Law

In 2010, just three years after David Beckham left Real Madrid, the first amendments to the Beckham Law were made. The aim was to focus the regime on workers with earned income of less than €600,000 per year.

Subsequently, in January 2015, further reforms were made. On the one hand, professional athletes were excluded from the regime, although this measure did not have a retroactive effect on foreign players who were already covered by the law.

In addition, the income limit of 600,000 euros per year to benefit from the regime was removed. Income above this figure started to be taxed at 45%, while income up to 600,000 euros continued to be taxed at 24%. For dividends, interest and capital gains, the tax rate was increased from 19% to 23%.

Eligibility for the Beckham Law

First, the following conditions must be met:

• Not have resided in Spain during the 10 years prior to the posting.
• Have an employment contract in Spain and the employer must be a Spanish entity or a non-resident entity with a permanent establishment in Spain.
• If you are a director of a Spanish company, you must hold less than 25% of the share capital.

To find out exactly whether you can benefit from the Special Regime for posted workers, as well as to look for the best tax optimisation alternatives, you can contact our tax advisors in Barcelona.