Saturday 25 April 2015
Log in

Login to your account

Username
Password *
Remember Me

  • Meet the key players in the Iberian legal market ´face to face´

  • Awarding Excellence

  • 1
  • 2

NOTE! This site uses cookies and similar technologies.

If you not change browser settings, you agree to it.

I understand

News

  • New Cuatrecasas practice targets €5bn equestrian sector +

    Cuatrecasas, Gonçalves Pereira has launched a new practice focused on the equestrian sector, which is valued at more than €5 billion in Spain. Read More
  • Freshfields appoints new Spain managing partner +

    Freshfields Bruckhaus Deringer has appointed David Franco as managing partner for Spain. Read More
  • Linklaters concludes 5-year pro-bono project for Liberia +

    Lawyers from Linklaters´ Madrid office have contributed to a firm-wide pro-bono project to produce an indexed digest of the entire jurisprudence of Liberia. Read More
  • Clifford Chance advises Spanish banks on Saudi rail project +

    Clifford Chance´s Madrid office has advised a syndicate of Spanish banks on the extension of the maturity dates for bank guarantees relating to a high-speed Read More
  • Cuatrecasas and Bird & Bird arbitrators quit to go solo +

    Leading arbitrators at Cuatrecasas Gonçalves Pereira and Bird & Bird have left their firms to set up their own practices amid concerns about apparent conflicts Read More
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21

News focus

  • What makes you special? +

    General counsel are under intense pressure to do as much work as possible in-house to save money, if law firms want to win instructions they Read More
  • Gaining momentum +

    With new research showing that law firms in Spain are expecting growth in profits and revenue in the coming year – while many also anticipate an Read More
  • Time to increase fees? +

    Exclusive research conducted by Iberian Lawyer reveals that almost a third of law firms in Spain and Portugal plan to increase their fees. Is this Read More
  • Reshaping your firm +

    The financial crisis dealt a severe blow to many firms but also presented an opportunity for strategic renewal. How many law firm leaders have taken Read More
  • Lisbon reborn? +

    A new era has dawned in Portugal. Following a clean exit from the EU bailout, coupled and three consecutive quarters of GDP growth, a sense Read More
  • 1
  • 2

Changes in the Spanish "Beckham Law", but still an attractive regime - Cuatrecasas Gonçalves Pereira

The Spanish impatriate tax regime, enacted in 2004, also known as the 'Beckham Law' – as football player David Beckham was one of the first individuals to apply it – was amended with effect from January 1, 2010, despite pressure from the Spanish football lobby, which has benefited extensively from it.

Under the amendment, employees expecting employment income of over €600,000 per year will no longer be able to apply the impatriate regime and they will instead now be taxed under the general rules on personal income tax, at progressive rates of up to 43% (instead of the current 24% flat rate applied under the impatriate regime).

The rule enacted in 2004 was aimed at establishing a tax regime to attract talented people to work in Spain, particularly the top executives of multinationals who might then set up their regional headquarters here, and bring with them highly qualified employees. The regime also aimed to improve the Spanish economy in the long run; with the belief that the increase in economic activity would compensate for the tax cost of the measure.

The impatriate tax regime applies to non-resident individuals moving to Spain due to employment contracts, and who become Spanish tax residents. If they opt to apply the regime, only the income they obtain in Spain will be subject to Spanish taxation (applying a flat rate of 24%, instead of a progressive rate of up to 43%) during the tax year in which they become tax resident in Spain, plus the following five years. Capital gains and interests obtained in Spain will be taxed at a flat rate of 19%. The regime is thus a very attractive regime for many people now resident for instance in the UK facing taxation up to 50% on their income.

Sonia Velasco, de Cuatrecasas, Gonçalves Pereira, describe la reforma de la llamada "Ley Beckham", en vigor desde del 1 de enero de 2010. La ley original tení­a como fin atraer a España a profesionales altamente cualificados, especialmente altos directivos posiblemente interesados en el establecimiento de sedes regionales en el paí­s. Estos profesionales con ingresos superiores a €600,000 anuales, tributaban 24% en lugar del vigente 43% para los residentes con remuneración a este nivel. La autora opina que el cambio podrí­a tener un efecto negativo sobre la economí­a española.

To apply this regime, individuals must have not been tax resident in Spain during the previous 10 years. They must work for a company resident in Spain, or for a Spanish permanent establishment of a nonresident business, effectively carrying out at least 85% (or 70% in some cases) of that work in Spain.

During the six years of its existence, many people from different fields, including football players '” as has been widely reported by the media '” who have employment relationships with football clubs, have applied the regime.

The amendment has not though stopped important global banks from considering moving some of their London-based teams to Spain to benefit from the impatriate regime, and to avoid the increase of tax rates there. The current trend is for financial institutions to consider moving some of their operations to Spain, with even some hedge funds also reportedly considering the option.

As mentioned, under the amendment, employees expecting employment income of over €600,000 per year will no longer be able to apply the regime. The modification especially hits football players since many have in most cases their main income paid in the form of salary, to which the limit of €600,000 or above applies. The new limits in the application of the regime might not though affect others considering using it if the composition of their income is not limited solely to salary income (to which the €600,000 limit applies).

With regard to tax payers benefiting from the impatriate regime before January 1, 2010, the new limit on their salary is not applicable.

The Spanish government has justified the amendment by stating that high earning taxpayers cannot benefit from lower taxation, such as the one in the impatriate regime, considering Spain's current economic crisis. However, I believe that the government might not have thoroughly analysed the impact that this tax regime could have on the Spanish economy, particularly regarding economic sectors like life sciences, finance, and high-tech industries, as well as the activities directly or indirectly related to professional sports, such as publicity and communication agencies.

Sonia Velasco is a corporate partner with Cuatrecasas Gonçalves Pereira in Barcelona. She can be reached via This email address is being protected from spambots. You need JavaScript enabled to view it.

Iberian Region

Iberian Lawyer’s Annual Reports focusing on Madrid, Barcelona and Lisbon.

Global Markets

Iberian Lawyer’s Annual Reports covering the global markets, including USA, Latin America, Africa and many others…

Practice areas

Iberian Lawyer’s Annual Reports look in-depth at specialist areas of practice, including Banking & Finance, Compliance, White Collar Crime, and many others…

FacebookMySpaceTwitterGoogle BookmarksLinkedinRSS Feed

Contact Us

Iberian Legal Group SL

Legal Information and Acceptance

Mail Us
This email address is being protected from spambots. You need JavaScript enabled to view it.
Phone
T: +34 91 563 3691
F: +34 91 563 3702
Location
Lagasca 138
28006 Madrid, Spain

Features

Learn more about Iberian Lawyer

News
Special Reports
Law firm Profile
Client View
Our events
Premium content
And much more...