Amendments to the “Beckham Law” in the horizon for relocated employees in Spain - Celia Alliance

September 28, 2022

Global mobility is an irrefutable trend. In our ever-more globalized world, attracting talent has become a need to enterprises; a need that trespasses borders. This reality, known to the Spanish legislator, is the rationale behind the pre-draft of proposed amendments to the Spanish Special Tax Impatriates Regime, applicable to qualifying employees relocated to Spain.

There is no doubt that, nowadays, territorial attachment has become secondary to individuals as evidence from the success of nomadism during the COVID-19 pandemic; but global mobility is a phenomenon that started decades ago. The need to not only support the internationalization of Spanish enterprises, but also make the Spanish market attractive to multinational companies led the tax legislator, at the beginning of the century, to introduce tax benefits in the income tax law. Its purpose was to boost relocation of highly qualified workers to our territory.

After several amendments, with the aim of creating a more attractive environment for investment and talent, the Special Tax Regime for employees relocated to Spain (commonly known as “the Beckham Law” or “impatriates regime”) may be altered once again as the Draft of the Promotion of Emerging Enterprises’ Ecosystems Act, published last December 27th (“the Draft”), makes its way into the Congress. T The Draft includes a proposed amendment to article 93 of the Personal Income Tax Law (Ley 35/2006, de 28 de noviembre, del Impuesto sobre la Renta de las Personas Físicas), the provision setting the requisites for employees relocated to Spain to qualify for the special tax treatment.

Which Are The Proposed Changes To The Beckham Law For employees relocated To Spain?

Article 93 of the Spanish Personal Income Tax (PIT) Law provides for a flat tax rate of 24% on employment income derived worldwide up to 600.000 €, and non-resident treatment to any other income. Therefore, any income different from employment income would only be taxed to the relocated employee if sourced to Spain. Applicable tax rates will range from 19% to 26% for interests, dividends, and capital gains, and a flat 24% rate for all other types of income.

Amendments proposed to article 93 PIT Law include relaxing the requisites to access the regime, extending its term of application, and expanding the covered impatriates to include  family members of the employees relocated to Spain. The proposed provisions represent a step-up of the tax legislator in favour of global mobility, and an attempt to fix some of the outstanding issues that have been identified from experience over the years. These issues were summarized in the report issued by the Commission of Experts for the Reform of the Spanish Tax System in 2014.

More specifically, proposed changes include:

OUTSTANDING ISSUES

Despite proposed provisions implying real improvements in accessibility and scope of the special regime for employees relocated to Spain, there is still a long way to go, since relevant outstanding issues are not being addressed in this reform:

THEREFORE…

Even if the tax legislator’s intention to attract foreign talent seem clear, the Draft has only started the parliamentary process, so the above proposed provisions are simply mere expectations for the time being.

Therefore, we will have to wait to know the final wording for these provisions and the actual extension of the changes in the special regime for employees relocated to Spain.

Find out more

This article was produced by Laura Vicente, expert lawyer in the tax law department at CECA MAGAN. Spain, a CELIA Alliance member firm.

For further information or if you have any queries relating to the content of this communication, please contact us.

CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.


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CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

Copying
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

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