Spain’s new “Ley de Startups” came into force on 1 January 2023. To give its full name this is the Ley 28/2022, de 21 de diciembre, de fomento del ecosistema de las empresas emergentes (you can see why Ley de Startups has become its popular name!).
The preamble to the law, which takes 10 pages of closely typed A4 and 5.097 words (I had to check because of its outstandingly boring treatment of some very exciting new law), explains that its purpose is to make Spain more attractive for inward investment, new technology and to attract talent to Spain.
Included in this new law, which covers a lot of different areas, are provisions that have indeed made Spain very attractive to individuals who like the idea of coming to Spain to live and work.
In this article we focus solely on the special tax regime contained in this law, which is already attracting a lot of international attention, especially for those who have the good fortune to work for a non Spanish employer, for example a business based in the EU, UK, USA or, indeed, anywhere else in the world.
This law contains amendments to both immigration regulations and the tax regime, popularly called the Beckham Law. This article is focuses solely on the tax regime as it will confuse the reader to tackle both systems in a single article. We analyse the closely related Nomad Visa scheme here.
The (new) Beckham Scheme, or more appropriately the Article 93 regime, (Régimen especial impatriados)
Despite the fact that this regime has not applied for many years to sportspersons working in Spain, the Beckham label persists, such is the power of his branding! The regime was originally designed to allow individuals who move to Spain to take up work, to be treated as non-residents for the purposes of income and wealth taxes.
The Ley de Startups has made some very important changes to this regime. For those who have the aptitude the full text of the regime can be found in Article 93 of the Ley 35/2006, de 28 de noviembre, del Impuesto sobre la Renta de las Personas Físicas y de modificación parcial de las leyes de los Impuestos sobre Sociedades, sobre la Renta de no Residentes y sobre el Patrimonio. Here is a link to the law itself.
In more detail the regime:
- Income tax is only charged on income arising in Spain. Worldwide income is ignored whether remitted to Spain or not. (No change from before)
- Wealth taxes only apply to real estate and other assets located in Spain. Other assets include bank accounts, company shares and other movable assets that are subject to Spanish law. (No change from before)
- The regime is optional and a person needs to elect for its application within six months of commencement of activity in Spain. (no change from before)
- It is available to people who move to Spain to take up employment by a Spanish business (no change from before)
- It is available to those who move to Spain to work from a home in Spain (known in Spain as teletrabajo), making use of suitable technology. In particular, those benefiting from a Nomad Visa are included under this heading. (This is new)
- Coming to Spain to become a director of a company. Being a director of an asset investment company is excluded from this in the case that the director is also a 25%+ shareholder. (This is new)
- The performance in Spain of a highly qualified professional activity providing services to emerging companies (as defined), or who carries out training, research, development and innovation, receiving remuneration that together represents more than 40% of all business, professional and other personal work income. (This is new)
- Carrying out in Spain an economic activity classified as an innovative entrepreneurial activity and/or has a special economic interest for Spain and for this purpose has a favourable report issued by ENISA. This is a Government body focused on supporting small and medium-sized companies with the potential for transformation, which are committed to entrepreneurship and innovation. (This is new)
- It is available to a person that has not been resident in Spain for the preceding 5 years (this was 10 years before)
- The regime can apply to the tax year of arrival plus the next 5 years. (no change from before)
- Only income arising in Spain (i.e. from Spanish sources) is taxable in Spain.
- The tax rates are 24% on the first 600.000€ taxable income and 47% thereafter. No personal allowances or deductions apply, apart from the single exception of a deduction of 10% for gifts made to registered charitable entities. (No change)
- Wealth taxes can only apply to Spanish located assets, i.e. Spanish real estate and Spanish assets, bank accounts, company shares, etc. (No change)
- Family members can be included in the regime, i.e. spouse and children under 25. (This is new)
Interestingly, despite the fact that the individual subject to this regime is treated as a non-resident of Spain for non Spanish income, the tax office will issue a certificate of tax residence although it will probably not confirm residency within the usual meaning of any relevant double tax treaty.
Unfortunately, the underlying detailed rules are complex and individuals will need professional guidance to navigate through the options and application formalities.