Main differences (Beckham’s law) between the basque country and the rest of spain

Beckham not only left his goals and his oxygenated blond hair in Madrid. The footballer achieved back in 2005 what few have done (recently a distinguished Basque; Celáa): That a law is named and known by the surname of its promoter.

In this case, by Beckham Law we refer to the special regime for posted (or impatriate) workers and their special (and improved) taxation.

This regime is similar to the impatriate regimes existing in France, Holland, Italy or Portugal.

The Beckham law in the Basque Country offers a different regime than in the rest of Spain.

Recent changes in the Beckham law (spanish)

Currently, for all Spanish autonomous communities except for the Basque Country and Navarra, the special regime for impatriate workers is regulated in Article 93 of the Personal Income Tax Law.

Under the special regime, even if the posted person acquired the status of tax resident, he/she was allowed to pay tax only on income obtained in Spain and at the reduced rate for non-residents (i.e. paying 24% of his/her salary without limits as opposed to 47%).

This option has been limited over the years and the abusive use of very high hiring:

– Since 2010, the maximum salary for which you are taxed at a flat rate of 24 percent is capped at 600,000 euros. The rest will go directly to 47%.

– Since 2015, professional sportsmen and women whose employment relationship is regulated by Royal Decree 1006/1985, of June 26, were expressly excluded.

The special regime for impatriate workers or the Beckham law in the Basque Country

In Bizkaia, the Beckham Law or special regime for posted workers, is regulated in Article 56. Bis of Formal Rule 13/2013, of December 5, on Personal Income Tax.

There are currently important differences between the special tax regime of the Basque Country and that of the rest of Spain (Common Territory). The three foral treasuries collect the regime in an identical manner except with the aforementioned reference to Gipuzkoa.

Basically, the three provincial treasuries allow to declare 15% of the salary exempt without limits of amount in the personal income tax and to apply a series of deductible expenses related to the displacement, as long as the international labour movement fulfils a series of requirements regarding the work performed.

In general the work will be produced for a Spanish company (it does not have to be in its entirety), with an actual contract established by a Spanish company and for which the work is physically carried out from Spain.

The work to which this regime can be applied must be qualified as research, development, scientific, technical and financial.

In Gipuzkoa since 2018, an express reference to commercial tasks/work is included, which broadens the application of the regime to a group that usually participates in internationalization tasks.

What is the purpose of this regime today?

The Beckham Law or special regime for impatriates can be seen today in the Basque Country as a tool to:

• attract people with very specific job profiles and tasks that may not be able to be covered at present in origin.
• Promote the Basque Country as a territory for technological or innovative companies so that they can establish themselves and hire at more reasonable costs.
• To reduce the hiring of “Basques around the world” or foreign talent.
• Build more competitive salaries with a not so high business cost.
• Facilitate the hiring of the person, whether Spanish (repatriating local talent) or foreigner who has not resided in the Basque Country in the last 5 years.
• Facilitate the taxation of the person, who will only be taxed on the salary received with an exemption of 15% of the total in their annual Personal Income Tax. Without the need to make any previous communication or to present a different document.

The company is able to guarantee this employee a net income equivalent to what he/she could receive abroad without the need for the company to assume a stratospheric salary cost.

How is the special regime calculated?

With the rules (and the program) of the annual Personal Income Tax by making a simple calculation:

1. 15% of the total income is exempted.

2. The “normal” deductible expenses are subtracted: Social Security, minimums for descendants, contributions to pension plans, if applicable), and

3. “Specific” deductible expenses related to the relocation are deducted with an annual limit of 20% of the salary. These are:

• Travel and moving expenses necessary for the establishment in Bizkaia of the taxpayer, as well as of the members of his/her family unit. The expenses corresponding to trips made to his/her country of origin will be understood to be included in this section, with the limit of two per year.
• Expenses derived from the schooling in Bizkaia of the descendants of the taxpayer.
• Expenses for courses of Basque and/or Spanish followed by the taxpayer or another member of his/her family unit.
• Expenses for the lease of the one that constitutes the habitual residence of the taxpayer in Bizkaia, as well as the expenses originated by the hiring of services or supplies of the same one.

Here there is an example of the tax benefits of this tax regime in the Basque Country.

If you are a company looking to minimize your salary costs and hire people from all over the world, or if you think you could take advantage of this regime for a job opportunity in your return to the north of Spain, do not hesitate to contact us.