Are you planning to relocate to Spain for work reasons?
Employees who establish residence for tax purposes in Spain as a result of their relocation may opt to pay Non-Resident Income Tax.
This special taxation regime, which is only applied for a period of six years, has its requirements and is applicable to employees only, as a result of an employment contract with an employer in Spain, in accordance with articles 113 to 120 of the Personal Income Tax Regulation.
The applicable period of six years comprises the first calendar year in which the new resident stays in Spain for more than 183 days, therefore adopting the consideration of tax resident in Spain, including the following five years.
However, you can only benefit from this regime if you haven’t been a tax resident in Spain ten years prior to the relocation. Likewise, it wouldn’t apply if you were hired by a permanent establishment located in Spain.
This regime, also known as the Beckham Law, involves taxation on income obtained in Spanish territory only, meaning from the date of arrival in Spain until the expected departure date, the rates being 24% on the first 600.000 euros and 45% on the remainder from that amount.
On the other hand, it is possible to opt-out from this regime as long as you do so during the months of November and December, prior to the start of the following calendar year, but please bear in mind that, if you do, you won’t be able to revert to the Beckham Law.
Finally, you must know that this special regime is not compatible with the resident status for the purposes of double taxation agreements and the right to its benefits, meaning you won’t be able to apply the concept of tax resident in the country of origin of which you are no longer a resident in.
Please don’t hesitate to contact tax experts, since depending on the autonomous community you are being relocated to, tax reductions after the application of the Beckham Law could be up to 50%.