Latest news with #BeckhamLaw
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.
Local Spain
06-05-2025
- Business
- Local Spain
Spain slams 'insulting' claim that Beckham Law steals from foreigners
In recent months, the Spanish Tax Agency has been vilified in paid advertisements taken out in renowned newspapers in both the United Kingdom and the United States. In The Financial Times a full-page ad stated "WARNING: Spanish pickpockets operating in this area" on top of a plaque labelled 'SPANISH TAX OFFICE: EXPLOIT, PROFITEER, DISCRIMINATE'. Stateside, the giant message in The Wall Street Journal was 'Time won't be the only thing you waste when you move to Spain' with an image of a crumpled up dollar bill. In both cases, the call to action was 'if you're being exploited by the Beckham Law', 'you're not alone', 'you have rights', 'get in touch with us'. Similar ads and interview-based articles have appeared in other foreign publications, from the Daily Mail and the Daily Express, to the Irish Times and Switzerland's Le Temps and Berner Zeitung. They have even set up a website called The lawyer and law firm behind the eye-catching accusations is American-Canadian Robert Amsterdam, of Amsterdam & Partners LLP, which has offices in London and Washington DC. Writing in Sears, Robert Amsterdam argued that the Spanish authorities have "cynically weaponised a tax law whose original purpose was to attract foreign wealth" and that "high-earning foreign employees are now caught in the crosshairs of a systematic assault by the Spanish revenue authority." Amsterdam, who regularly writes in leading publications, was referring to The Beckham Law, which was first introduced in 2004 to attract talent and highly qualified workers to Spain with fiscal incentives. It was nicknamed after the footballer David Beckham as he was the first one to take advantage of it when he moved here to play for Real Madrid. It's taken several months for Spain's Hacienda tax office to respond to Amsterdam's "slanderous" accusations, no doubt because on Tuesday May 6th the international lawyer held a press conference in Madrid under the title "Hacienda vs The People: An initial report on Spain and the Beckham Law" (see here). Spanish tax authorities' counterargument is that over the last decade, nearly 37,000 taxpayers in Spain have opted for the Beckham Law tax regime, of which only 0.5 percent (less than 200 in total) have been subject to an inspection for possible non-compliance. The Beckham Law allows individuals and their family who acquire tax residency in Spain as a result of their relocation to the Spanish territory to pay Non-Resident Income Tax (IRNR in Spanish) in the tax period in which they acquire tax residency in Spain and the following five years. During this period, their tax rate in Spain on the first €600,000 of income will be lower than the rate applicable to personal income tax (IRPF in Spanish). Furthermore, unlike personal income taxpayers who pay taxes in Spain on their entire worldwide income, under this so-called special regime they don't pay taxes in Spain on income from overseas, except for employment income. According to Spain's Tax Agency, the criteria or goodwill when verifying the correct application of the Beckham Law regime has never changed, even after amendments were made to it. According to data obtained by Spanish left-leaning daily El Diario, a partner of The Guardian, of the completed inspections of the 200 foreigners who were subjected to inspection, 70 percent were resolved with a report of agreement or compliance, and only 30 percent were the subject of a complaint or appeal. Sources with knowledge of the matter told El Diario that the real reasons for Amsterdam's campaign are related to a British client who is currently in litigation with the Spanish treasury. In audits carried out by Spain's tax agency, cases have been detected in which the taxpayer goes against Beckham Law requirements by creating an artificial company in Spain without resources, which hires the person in question for work and then provides services to the foreign company, which actually carries out the activity. There are also allegedly more serious cases, where a fictitious company is directly created in Spain to apply the Beckham Law precisely the year in which a very large capital gain is received from abroad. The intention is not to pay tax in Spain since that capital gain originates abroad, but also not to pay tax in the other country either as the company is not a resident of that other state.
Local Spain
15-03-2025
- Business
- Local Spain
Inside Spain: Discrimination of non-residents and more droughts
In recent months, Spain's targeting of non-residents has made headlines, especially after Prime Minister Pedro Sánchez announced that he will either impose a supertax or completely ban non-resident buyers from outside of the EU as a means of addressing the country's housing crisis. Now the European Commission has announced that it will take Spain to the Court of Justice of the European Union for keeping a discriminatory tax for non-resident taxpayers which relates to the taxation of capital gains from the transfer of assets. The European Commission believes Spain is violating the principle of free movement of capital by denying non-resident citizens who pay taxes in Spain a possibility that it offers to resident taxpayers. That's because Spanish law allows residents in Spain to choose to defer capital gains tax when the payment for the transfer of assets is postponed for more than a year or is paid in instalments over a period exceeding one year. In this case, the tax is paid proportionally as each instalment is received, allowing for a "cash flow benefit" since only the portion of the capital gains corresponding to the payments made is taxed. In other words, a lower amount of capital gains results in a lower capital gains plusvalía tax rate than if a large bulk profit was made. However, in the case of non-residents, the tax is collected in full at the time of the asset transfer, which prevents non-resident taxpayers from deferring payment of the tax, "even if they receive payment in instalments over time." Non-residents in Spain pay a non-resident income tax called Impuesto sobre la Renta de no Residentes, or IRNR, which can include property rental income tax, inheritance tax, wealth tax and capital gains tax. Brussels already opened a case against Spain for this same issue in December 2021 and issued an ultimatum to amend the legislation by May 2024, but Spanish authorities "have maintained that their tax legislation complies with EU law". According to the European Commission, this differential tax treatment means that non-residents "face a significant cash-flow disadvantage compared to residents." The EC has now given Spain a two-month ultimatum for failing to adapt its rules on withholding tax on capital gains received by non-resident taxpayers to the freedom to provide services. A London law firm has also recently called Spain's Beckham Law a "tax trap" for foreigners, taking full page adverts in respected British financial newspapers criticising the special tax regime's rules as "inconsistent with fundamental European law and human rights". In other news, Spain may be nearing the end of a four-year drought, but it can expect such dry spells to become increasingly "frequent and severe" due to global warming, according to a scientific report published on Thursday. Spain has long faced "semi-permanent water stress" due to its geographic location, admitted the report by climate and oceanography experts from the global Clivar network that studies climate change. But while rainfall in recent years has been around average, "higher temperatures have led to greater atmospheric evaporation, causing longer and more intense droughts," said the report, which reflects scientific consensus on the topic. At the beginning of this century, Spain experienced "the highest frequency of severe droughts in the last 150 years", so it can therefore expect "more frequent and severe drought conditions", the report said. This in turn will increase the risk of wildfires, which will be "more extreme" and occur over a longer period from June to September when temperatures are warmer. They will also hurt two key sectors of Spain's economy, agriculture and tourism. "Optimal conditions for summer tourism will deteriorate" but will improve "during the intermediate seasons", something many of us were already expecting. But it's still worth cautiously celebrating the national weather agency Aemet's announcement this week that the drought that has parched fields and prompted water restrictions since 2021 will soon end thanks to all the abundant rainfall we've had recently. The drought has caused a drop in the harvests of cereals, olive oil and wine, and prompted authorities to draw up plans to have fresh water shipped in by boat to Barcelona, Spain's second-largest city.
