Beckham Law: Can I Take Advantage of It?
It is not difficult to have heard of the Beckham Law on more than one occasion, even if you don’t follow the current football or legislative news since the controversy surrounding this law when it was approved was remarkable. Here’s what the Beckham Act is all about, what changes it has undergone since 2004 and who is eligible today.
What is the Beckham Law?
The Special Displaced Workers Regime, the original name of the Beckham Act, was approved in 2004 in Spain with the aim of boosting the national economy by attracting executives and qualified personnel from abroad. The incentive was that, under that regime, the displaced workers who changed their tax residence to Spain would have a tax reduction in their Spanish Income-tax (IRPF). Specifically, it allowed them to be taxed as non-residents at the general rate of 24% instead of 43%.
What began as an idea to attract brains from all over the world became a perfect formula for Spanish soccer clubs to sign the best players on the planet since, with this law, their taxes would be much lower than in others Countries with a football tradition. It was popularly called the Beckham Law because one of the first to take advantage of it was the English galactic.
Beckham Act: 2010 Reform
Three years after David Beckham left Real Madrid, the law baptized with his name underwent the first modification. Seeking that the Special Regime for displaced workers cease to be only a reef for the entry of top-level footballers, in 2010 it was decided that only those who had income from work earnings of less than 600,000 euros per year could be eligible.
Beckham Law: Changes in 2015
On January 1st 2015 reforms of the Beckham Act take place again. On one hand, it excludes professional athletes from this regime. However, there is no retroactive effect, so that foreign players who had a contract in force were not affected by that modification.
On the other hand, the limit of the € 600,000 per year disappears in order to benefit from the scheme. The higher incomes will tax 24% to 600,000 euros and from there to 45%.
Dividends, interests and capital gains tax a rate of 19% to 23%.
Requirements to apply for the Beckham Act today
First, the following conditions must comply:
- Not to have resided in Spain during the 10 years before the displacement.
- The transfer to Spain must be by an employment contract and the employer must be a Spanish entity or a non-resident entity but with a permanent establishment in Spain, or for being appointed director of a Spanish company, in which the displaced person holds less than 25% of the shares.
- Next, the petition must be filed with the Tax Administration within 6 months of the start of the activity that appears at the Social Security Registration in Spain (Model 149).
- The regime can be applied the first year of being resident and the following five.
- The annual income tax return must be filed by anyone who is covered by this rule through Model 151.
To know exactly if you can accept the Special Regime for displaced workers, as well as look for the best tax optimization alternatives, you can contact GMTax Consultancy through email or phone.