In a globalized environment, it is increasingly common to hire non-resident workers, which is why we have written this fiscal article on the SPECIAL REGIME OF DISPLACED WORKERS IN SPANISH TERRITORY (also known as “the Beckham Act”), due to the tax advantages that this special regime offers for those who meet the requirement of NOT having been living in Spain over the past 10 years and having moved to Spain to work as an employee or as a counsellor/manager at a Spanish company (or at a non-resident company with a permanent activity in Spain) where they own at least 25% of the share capital.
The procedure is initiated at the request of the worker by submitting Form 149 and must be made within 6 months after their arrival in Spain submitting the employment contract signed with the Spanish company and its registration in the Social Security.
The Department of the Treasury, after reviewing compliance with the requirements, will notify the applicant of their inclusion in the special tax regime, which is granted for a period of 6 years, with the possibility of waiving it at their request.
During the time of application of this special regime, the displaced worker will be taxed according to the regulations of the Non-Resident Income Tax even if they have their permanent residence in Spain, so the tax rate of 24% on work income up to 600,000 Euros will be applied (in case of a higher remuneration of 600,000 Euros, they will be taxed at a 24% for the first 600,000 Euros and 45% for the additional amounts).
The displaced worker must pay taxes for the global work income obtained (either in Spain or abroad) and for the rest of the income obtained in Spain (dividends, interest, real estate income, capital gains and losses, etc.) by submitting Form 151.
The paying company, once the worker notifies of their inclusion in the special regime, must withhold a 24% (45% in case of a higher remuneration of 600,000 Euros) and enter these withholdings on Form 216 – Non-resident Income Tax Withholdings, and the annual summary in Model 296.
Taking the above into account, it is very important to have detailed information on the application of this special regime, as well as correct advice on the matter, both for companies, which can take advantage of this tax advantage to attract foreign talent, as well as for displaced workers who are going to move or have recently moved to Spain.
Sara Sala Alcaide
Partner at TIKA ABOGADOS