Latest news with #BeckhamLaw
Local Spain
25-07-2025
- Business
- Local Spain
The legal alternatives to Spain's Beckham Law tax regime
Taxes For Members Spain's Beckham Law has had some bad press recently and its promise of a flat tax rate of 24 percent is not always as good as it sounds. With that in mind, here are other favourable and legal tax arrangements investors and business people can consider. Please, login for more See Also
Telegraph
12-07-2025
- Business
- Telegraph
Spain is robbing British expats, says former tax chief
The former head of Spain's tax office has accused officials in the country of 'robbery' against British expats. Ignacio Ruiz-Jarabo said the Spanish Tax Agency (AEAT), which he oversaw from 1998 to 2001, had created a 'fiscal hell' that put off international investors. He told The Telegraph of how wealthy foreigners who moved to the European nation to take advantage of a lucrative tax scheme faced retrospective investigations into their finances. The tax rules, dubbed the 'Beckham law' after Sir David Beckham utilised them during his time at Real Madrid, charge foreign workers a flat 24.75pc tax rate on Spanish-sourced income up to €600,000 (£517,000) per year for six years. It is far lower than the progressive tax rates of up to 47pc paid by Spaniards. Dividends, interest and capital gains generated outside Spain are generally exempt from tax under the regime. But users of the scheme who have high incomes risk being caught up in tax audits that target the wealthy in Spain, Mr Ruiz-Jarabo said. 'There isn't a special focus on foreigners, [but] there is more of a focus on high earners and business people because they are bound to have more assets. 'Many of the people who have been certified have a few years later received a tax inspection denying their [tax] position as expatriates. This situation produces legal insecurity.' He said he knew of cases where the authorities targeted foreigners with financial audits, regardless of their status under the tax scheme. 'This is robbery to expatriates that have been unfortunate enough to be on the receiving end of these inspections.' He claimed as a result, foreigners and native Spanish taxpayers are threatened with huge tax bills and fines as much as three times the size of alleged unpaid taxes. Mr Ruiz-Jarabo said Spanish officials were incentivised to target wealthy expats because of a bonus structure that rewards those who collect the most tax. In 2019, the last year for which data is available, a €95m (£82m) bonus pot was set aside to incentivise raising €150bn of income tax and VAT revenue. The bonus system has been criticised for encouraging arbitrary investigations and confiscations. Taxpayers in Spain appealed 30pc of tax audits in recent years, according to figures provided by the Spanish government. It said less than 1pc of taxpayers using the 'Beckham law' had been the subject of tax audits. AEAT conducts around 27,000 tax assessments per year, according to official sources. Between 2020 and 2023, courts ruled totally or partially in favour of AEAT in 77pc of those cases. This compares with a rate of around 85pc for appeals won by HMRC during the same period. Last year, there were approximately 275,000 British people living in Spain. It is not known how many have used the country's flat tax rules for foreigners, which were introduced in 2005. The scheme requires that applicants have moved to Spain for work purposes, having obtained a contract with a Spanish company. They must not have been a tax resident in the country in the five years previously. 'Fiscal hell for Spaniards and foreigners' Mr Ruiz-Jarabo also criticised the proposed 100pc levy on the sale of Spanish properties to non-EU buyers. 'It is a completely unfair system this proposal of 100pc tax on foreigners purchasing property. It is an aggression against the freedom of movement of capital, it goes against the values of the European Union to put this type of barrier against the movement of capital. 'It is telling investors this is not a safe place to invest. It can only be understood from a radical Left ideology that those with money to invest should be seen as suspicious. It does not bode well for Spain's economy if it is implemented.' Madrid lawmakers are expected to vote on the proposal in the second half of this year. The levy could represent the latest blow for Britons who live and holiday in Spain. The ruling Spanish Socialist Workers' Party also wants to charge 21pc VAT on stays of less than 30 days – more than double the rate paid by hotels. Growing anti-tourist sentiment in Spain has already seen cities like Malaga and Madrid capping new licences for holiday lets, while Barcelona will ban them completely by 2028. Mr Ruiz-Jarabo said laws defending taxpayers in Spain had suffered 'mutilations' under Pedro Sanchez, the country's socialist prime minister, causing a 'fiscal hell for Spaniards and foreigners alike'. Official sources at the Spanish government said: 'Spain is an attractive and welcoming country for British businesses and citizens just as the United Kingdom continues to be a key partner and point of reference for Spanish companies and consumers. 'The Spanish Tax Agency is a prestigious, transparent institution, internationally recognised organisation and fully aligned with the highest standards expected of a modern tax administration.'
Local Spain
21-05-2025
- Business
- Local Spain
What to do if you're facing a tax inspection in Spain
Typically, a tax inspection is prompted by a specific incident or if you run a business that is under the Spanish tax agency's scrutiny for fraud control. This includes sectors where you often receive cash payments rather than bank transfers. You may also be targeted if you regularly receive VAT back from the authorities rather than having to pay more or if you're under Spain's Beckham Law tax regime. Unfortunately, these are both true for many foreigners here who work for companies abroad. If you do receive a letter from Hacienda's tax inspection unit, it's important to read the document carefully to understand all the implications. The letter will detail the reason for the inspection, the years they are inspecting and the information required, as well as the deadline for responding. It's very important to make sure you respond by the deadline or you could face fines. The first step is to start organising all your documentation which includes invoices, receipts, tax returns, statements from your bank etc. Ensure that everything is up to date and store them all together so you can find them all in one place. In Spain, you are obliged to keep all your documents and receipts for a period of six years, because inspections can go back this far. Secondly, you should go over all your numbers and calculations to make sure that everything is correct and there aren't any errors. If you have a gestor, you may want to contact them too to check all the calculations they've submitted are correct, as they can make mistakes too. Prepare you answers in case you have to justify certain expenses for your business, large cash transactions etc. If you don't have a gestor or accountant, you may want to contact one as they can help you prepare and anticipate what questions and information the Tax Agency will need. Occasionally inspectors may come to your place of work to conduct an on-site inspection, but they will only be able to do this if it's a place open to the public such as a café. If you work from home, they will have to have an administrative or court order if they need to inspect anything in person. Once you have got everything in order you will usually send your evidence digitally or in the post, without having to go in person. Sometimes, however, you may have to go in for an interviewing or questioning. The Treasury will notify you of the outcome within a certain amount of time and will let you know if everything is correct, if they need any more information or if you owed more money. It's important to answer any questions they have confidently and to stay calm, so you can show them you're on top of the situation. They will send you settlement with a result to be paid and typically offer a reduction if you accept it without filing any objections. If you do feel that the result is wrong, however, you can file an appeal. Be aware though, that this could result in a penalty fine. Once everything has been finalised and paid, it's essential that you keep all documentation organised and easily accessible in case they contact you again in the future. This means keeping all records of correspondence with the Tax Agency and the final result.
Local Spain
13-05-2025
- Business
- Local Spain
What Americans should know about Spain's Beckham Law tax regime
More Americans than ever are looking to use the Beckham Law to move to Spain and save on taxes, but is it really as good as it seems and what do you have to be aware of if you're from the US? Firstly, let's look at what the Beckham Law is. It's a tax regime that essentially allows those who have not resided in Spain for at least the last five years to pay a flat rate of 24 percent on their income up to €600,000 per year. Tax is also only paid on income earned in Spain, instead of a progressive tax on worldwide income. The normal progressive taxes for Spanish residents range from 19 to 47 percent. It was first introduced in 2004 to attract talent and highly qualified workers to Spain with tax breaks. The law was nicknamed after the footballer David Beckham because he was the first one to take advantage of it when he moved here to play for Real Madrid. It's important to know that not all Americans will qualify for the Beckham regime. For example, if you're here on the Digital Nomad Visa and are self-employed, then you are not eligible. It will only be for those who are employed by company's abroad. This initially seems ideal - a flat tax rate and tax breaks - why would you not take advantage if you qualify? But it's important to remember that not everything is as good as seems with the Beckham Law, and there are various factors you have to take into consideration if you choose to go for it. The first factor is how much you earn. Tax expert Mark McMillan from Sun Lawyers previously told The Local Spain: 'The special tax regime will be beneficial for those with an annual income from around €50,000 up to €600,000, so it will depend on your income bracket. Note that there are no allowances for your personal circumstances and as a result, people with spouses and children may find that they will pay less tax if they do not opt for the special regime'. So, if you earn below or above those amounts the Beckham Law won't bring you any benefits at all. It's also worth noting that Americans have to continue to file their taxes in the US even when they move to Spain. Therefore, if you pay 24 percent personal income tax in Spain under the Beckham Law, then you will pay the remainder - up to 32 percent - of the federal rate in the United States. This means that while the Beckham Law still has its benefits, it's less advantageous than it is for those from other nationalities. You also have to plan carefully and be fully aware of what becoming a Spanish tax resident could mean for you. If you're an American with IRAs, 401ks or trust funds, it's important you get advice from financial and tax experts in Spain, otherwise you could end up paying a lot more taxes than you were originally led to believe. Spain's Treasury has also intensified its scrutiny of those who benefit from the Beckham Law. Javier Vinuesa and Guadalupe Díaz-Súnico, of Gómez-Acebo&Pombo law firm told El Confidencial that 'many foreigners do not understand that the same administration that granted them the regime could, years later, question it". According to them, this leads to greater problems and a higher chance of being audited and investigated. "If there's no fraud, there's no litigation, but there are many gray areas, especially with Americans," several tax experts told El Confidencial. They explain that if you have tried to force the conditions to qualify for the regime, but didn't actually qualify in truth, it could have consequences for you in the future that are worse than having paid the normal amount of tax in the first place. In fact, in recent years, law firms in London have been challenging the Beckham Law claiming that it's a 'tax trap'. Some feel the specialist tax regime has not been advantageous for foreigners and that they've been treated unfairly by the Spanish tax authorities, subject to more checks and audits. In addition, the new Social Security agreement between the US and Spain does not factor in Beckham Law complications or solutions for remote workers, meaning that it's unclear what's covered. This could also make it so that Americans are more susceptible to being audited in Spain. If you don't qualify for the Beckham Law or you feel it's not right for you, one option several lawyers advise according to El Confidencial is to the region of Madrid, which allows for a reduction in the regional income tax rate. Those considering the Beckham Law or any other tax solution, must make sure they speak with a professional as each case is unique and what is best for someone else doesn't necessarily mean it's good for you.
Local Spain
08-05-2025
- Business
- Local Spain
More Americans than ever look to use Beckham Law to move to Spain
Americans wishing to settle in Europe are increasingly looking at Spain, and a new report suggests that the tax advantages offered by Spain's Beckham Law could be one of the main draws. The number of Americans living in Spain has risen by 10,000 in two years according to recent stats from Spain's National Statistics Institute (INE). The latest data from the INE shows there were 50,623 US citizens registered as residents in Spain in 2024, up from 40,159 in 2022. The Local interviewed many American readers who either moved here recently or want to move here and some of the top reasons were to escape Trump and the current political climate in the US, to feel safer and to have a better quality of life. Interest among Americans in moving to Spain also increased significantly in the months leading up to the November 2024 presidential election. According to Spanish law firms interviewed by Spanish news outlet El Confidencial, many Americans are also attracted by the fiscal incentives of Spain's Beckham Law. "We've been working with North American clients for many years, but it's true that in recent months we've received more requests to help them, both from wealthy individuals looking to invest in Spain and from individuals and families looking to settle here," Miguel Echevarría, partner of Deloitte 's Private Equity and Financial Investors division, told El Confidencial. Carlos Durán, partner at Uría y Menéndez law firm added that 'We've seen an increase in interest, probably driven by several factors, such as the cost of living in the United States and the post-pandemic work flexibility.' Antoni Murt , partner in the Private practice at EY Abogados, told the news outlet that they've also seen a notable increase among profiles linked to art, film, and culture, where the motivations tend to be personal such as family ties, Spanish partners, or cultural affinity. For Anna Roig , senior associate at Chevez Ruiz Zamarripa Spain, the return of Trump to the White House has also behind rising interest in a move to Spain and the Beckham Law. 'For several years, interest among Americans in relocating to Spain has been gradually increasing, a situation that became more acute in the months leading up to the November 2024 presidential elections, when inquiries from potential buyers interested in relocating multiplied,' she said. Other lawyers contacted by the news site pointed out how enquiries among US nationals often centred around finding out more about tax planning and whether they could take advantage of the Beckham Law tax regime. El Confidencial's report coincides with news that Spain's tax agency has this week rejected what it called a 'defamatory' accusation made by a UK-US law firm claiming that the country's Beckham Law is a 'tax trap' that "pickpockets" foreigners who move to the country to take advantage of this tax regime. The lawyer and law firm behind the eye-catching accusations is American-Canadian Robert Amsterdam, of Amsterdam & Partners LLP, who have taken out full page adverts in leading newspapers such as The Financial Times and the Wall Street Journal with claims that the Spanish tax office uses the Beckham Law to "exploits, profiteer and discriminate" against foreigners. Javier Morera, partner at Broseta law firm, told El Confidencial that 'the structures that work in the US aren't always optimal here. The use of trusts can be detrimental in the Spanish context.' The same applies for typical investment products such as IRAs, 401(k)s, or Roth IRAs, which require extensive tax review. The Spanish press has recently reported that the country's tax office has intensified its scrutiny of those who benefit from the Beckham Law. "If there's no fraud, there's no litigation, but there are many grey areas, especially with Americans ," several tax experts told El Confidencial. The Beckham Law was first introduced in 2004 to attract talent and highly qualified workers to Spain with tax breaks. It was nicknamed after the footballer David Beckham because he was the first one to take advantage of it when he moved here to play for Real Madrid. It essentially allows those who have not resided in Spain for at least the last five years to pay a flat rate of 24 percent on their income up to €600,000 per year. Tax is also only paid on income earned in Spain, instead of a progressive tax on worldwide income. The normal progressive taxes for Spanish residents range from 19 to 47 percent. In 2023, the Beckham Law was linked to Spain's new Startups Law and modified to include some more favourable conditions for remote workers and entrepreneurs. This included exemption benefits of up to €50,000 for startups, a 50 percent bonus on carried interest, a 50 percent deduction for investing in new companies (up to €100,000), and exemption from wealth tax on assets located outside Spain for up to six years. To be eligible for the Beckham Law, you must work remotely for a company outside Spain, and cannot be self-employed. Therefore, you could take advantage of it if you move to Spain on the Digital Nomad Visa (DNV) and are employed by a company back in the U.S. but cannot if you're on the DNV and working for yourself.
