Royal Decree 687/2005 is more commonly known as the “Beckham Law”. British footballer David Beckham was one of the first to benefit from this special regime, taxed as a non-resident when he was employed by Real Madrid in Spain.
However, “natural persons” who become tax residents as a result of their stay in Spain may still choose to pay the non-resident income tax. This decision can be made during the tax period in which the individual becomes a tax resident in Spain. It can also be made in the following five tax years, provided that a series of requirements is met:
A) They have not been residents in Spain during the 10 tax periods prior to the one in which they are settling in Spain.
B) This settling in Spain occurs as a result of any of the following circumstances…
B1) An employment contract, with the exception of the special employment relationship of professional athletes regulated by Royal Decree 1006/1985, of 26 June.
B2) A consequence of the acquisition of the status of administrator of an entity in whose stock capital he or she does not participate or, to the contrary, when participation in this entity does not determine the consideration of a related entity in the terms foreseen in Article 18 of the Law on Corporate Tax.
C) He or she does not obtain income that would be considered to have been obtained through a permanent establishment in Spain.
How to proceed to qualify for this special tax regime option?
You must submit Model 149 to the tax administration. The declaration of the non-resident income tax will be completed using Model 151.
What tax rates apply to the income of taxpayers under the non-resident income tax?
• For 2016 and each subsequent year, the tax rate has been approximately 19 per cent for residents of the EU, Iceland and Norway; and it has been 24 per cent for all others.
• The tax rate for dividends has been 19 per cent. For interest and other income obtained from the assignment of own capital to third parties, the tax rate has been 19 per cent.
• Pensions and other similar benefits received by natural non-residents in Spain, regardless of the person who has generated the right to receive them, will be taxed according to a specific scale (contact us for detailed information).
• Capital gains, derived from the transfer of real estate, will be taxed at the rate in force in the year in which the income was accrued. From 2016 onwards, this has been taxed at 19 per cent.
Welex Lawyers & Accountants
C/ Ramón Gómez de la Serna 23, Local 7, Marbella Tel. (+34) 952 775 521 · info@welex.es · www.welex.es.
