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Spain: Changes to the inbound expatriates system: Beckham clause attracts talent to Spain


Eduardo Gómez de Salazar

The "Beckham clause" has been offered as an incentive for attracting talent in the Spanish Personal Income Tax Law since 2004. It involves a special tax system available for executives and other employees who, on being sent to Spain, meet the requirements to be treated as Spanish tax residents on the terms described in Article 9 of the Personal Income Tax Law, and satisfy the following conditions:

  • They must not have been resident in Spain in the 10 years preceding their assignment to Spain;

  • Their assignment to Spain must take place as a result of an employment contract;

  • Their work must actually be performed in Spain;

  • That work must be performed for a Spanish resident company or entity;

  • The salary income earned under that employment relationship must not be exempt from personal income tax; and

  • The expected compensation under the employment contract in each of the tax periods in which this special system is applied cannot exceed €600,000 ($766,000) per annum.

This system allows any taxpayers becoming tax resident in Spain to elect to be taxed, for the five fiscal years following the year they became tax resident, to apply the rules on determining the tax debt established in the Spanish law for non-tax residents.

The main effects secured by applying for this system are (i) being taxed only on Spanish source income, rather than on worldwide income; and (ii) being taxed at the tax rates provided for non-tax residents, which are significantly lower in Spain (for 2014, the highest marginal rate for a tax resident is 52%, although the rates depend on the autonomous community where the taxpayer has his residence, and the tax rate for a non-tax resident is a flat 24.75% rate, though these tax rates are set to change in 2015 to 47% for tax residents in Spain, and 24% for non-tax residents).

In practice, applying this system has posed various issues, notably related to assignments not originating from the execution of an employment contract or an assignment under an employment relationship (as occurs, for example, when a new general manager and chief executive officer is appointed at a Spanish subsidiary of a multinational group), and issues have also arisen with construing when the expected compensation may exceed €600,000 per annum, and thus determining that the system cannot be applied.

But the news is that the tax reform that is now before parliament changes both of these scenarios, (i) by including as a new requirement for applying the system that the assignments must take place as a result of the acquisition of director status at an enterprise in which the taxpayer does not hold an ownership interest and with which the taxpayer is not a related party, and (ii) by eliminating as a requirement for applying the system that the expected compensation must be higher than €600,000 per annum.

The reform also changes the applicable tax rate to the general component of net taxable income (which includes salary income). A rate scale containing two tax rates would be applied, and the marginal rate would be the same as that applying to tax residents in Spain where that component of net taxable income exceeds €600,000. It also includes a rate scale for the taxation of the savings component of taxable income (applying to interest, dividends and capital gains generated in Spain, among other items).

Although the approval of the reform now under consideration appears to offer a more favourable framework for incentives to attract talent to Spanish enterprises, the way in which it is applied gives rise to doubts and differences with respect to the special systems available in other countries (Portugal, Belgium or the UK), such as not allowing qualified investors or pensioners to benefit from the special system.

Eduardo Gómez de Salazar (

Garrigues Taxand, Madrid


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