Beckham Law: Form 151
Beckham Law is the tax for non-residents that apply only to income earned in Spain, not to world income. This option applies to the year of resettlement and the 5 following years, provided a number of other conditions are met. This law intends to attract highly skilled professionals from abroad through tax benefits.
In this article, we explain the tax return on the income of people who came to Spain to work and registered under the special regime for displaced workers, also known as the Beckham Act.
Beckham law requirements
All workers sent to Spain by their employers from abroad, as well as workers who have moved to Spain to work here and registered for special taxation under the so-called “Beckham Law”, must file an income tax return. There is no exemption from the obligation to file an income tax return based on the amount of income received. This regime can be applied the first year of being resident and the following five.
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).
If a person arrived in Spain after January 1, 2015, form 151 will apply.
Income taxed by the Beckham Law
Any income that a person earns or otherwise receives is taxed by this law.
Persons subject to tax under the special provision on displaced persons must declare the following income, that was received in Spain (from Spanish sources).
- Income from employment (wages);
- social benefits (e.g. unemployment benefits), pensions, severance pay;
- income from real estate (mainly rental income);
- income from movable property (interest, dividends, insurance payments, patent rights, etc.).
- income from self-employment (without a permanent establishment in Spain);
- capital gains (e.g. from the sale of Spanish real estate, shares, etc.);
- lottery winnings, damages, subsidies received (from the state or province);
- The special rules (“imputed income”) apply to empty real estate or its rent to family members, as well as to the taxpayer’s home if it is part of his property.
All income from any part of the world is treated as if it had been received in Spain and is therefore fully taxable. To a certain extent, taxes paid abroad can be deducted from this income.
Since 2015 professional athletes are excluded from this regime.
Incomes that are not applicable
It is important to stand out that some deductions and exemptions on incomes are not applicable under this special tax regime
Proceeds from donations and inheritance are not recorded on the tax return; they are not subject to declaration. This income has its own taxes. Therefore, if you received a donation, you must pay tax on the donation (within 30 days of the donation). If you inherited something, you have to pay inheritance tax (within 6 months from the day you died).
In Spain, it is usually possible to file a joint income tax return for members of the so-called “family unit“. However, that possibility did not exist when special rules for displaced persons applied. The taxpayer concerned is always assessed independently and personal circumstances are not taken into account.
Submitting Form 151
Displaced workers must file a tax return for 2019 by June 30, 2020. If you want the tax office to debit your bank account directly, you must file a tax return by 25 June 2020.
You can either fill in and submit the tax return yourself or you can fill in and submit it with a tax advisor. As an exempted employee, you can complete and submit your tax return yourself via the website of the Spanish tax office. In this case, there is no so-called “draft”, but you must declare your income and withholding tax, as well as deductions for donations or taxes already paid abroad.
Of course, you can also ask the tax advisor to prepare and submit your tax return. This saves time and nerves and is especially recommended for those who do not speak Spanish well or have several incomes from different sources.
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