Main differences of Beckham’s law between the Basque Country and the rest of Spain (part 2)

Let’s see a summary table with the main differences:

5 years of previous non-residence instead of 10 years?

Yes, that’s right. Bizkaia and the rest of the foral territories (Gipuzkoa and Araba) offer a tax planning opportunity for workers who have been residing abroad for some time or foreigners who want to carry out a project in the Basque Country.

Specifically, the regulations foresee that the transfer can take place from the common or foral tax system, that is to say, the previous year of application of the regime, the worker can have resided in another Spanish autonomous community (with the same special regime) or even in another foral community.

The regime can therefore be applied to a person working in Madrid in innovation and development who is transferred to Bilbao.

That year and the following 5 years his 15% of the salary will be exempt.

What is understood by specially qualified work?

These are people who are included in Contribution Group 1 of the general Social Security regime.

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They require a degree or engineering degree that have a direct relationship (ordinary labor or senior management personnel) with the activities described.

What are research and development, scientific, technical or financial activities?

Research and development activities that comply with 62.2 of the Foral Regulation on Corporate Income Tax:

• “Basic research” or original and planned inquiry aimed at discovering new knowledge and a superior understanding in the scientific or technological field, unlinked to commercial or industrial purposes.
• Applied research” or original and planned research aimed at obtaining new knowledge for the purpose of using it in the development of new products, processes or services, or in the significant improvement of existing ones.
• The “experimental development” or the materialization of the results of applied research in a plan, scheme or design of new products, processes or services, or their significant improvement, as well as the creation of non-marketable prototypes and initial demonstration projects or pilot projects, provided that they cannot be converted or used for industrial applications or for their commercial exploitation.
• The conception of “advanced software”, provided that it involves significant scientific or technological progress through the development of new theorems and algorithms or through the creation of new operating systems and languages, or provided that it is intended to facilitate access to information society services for people with disabilities.

Scientific and technical activities that comply with 63.2 of the Foral Regulation on Corporate Income Tax:

• The activity whose result is a technological advance in obtaining new products or production processes or substantial improvements to existing ones. Products or processes whose characteristics or applications, from a technological point of view, differ substantially from those existing previously, will be considered new.
• Technological diagnosis activities aimed at the identification, definition and orientation of advanced technological solutions, regardless of the results.
• Those activities that are related to projects within the field of sustainable development and environmental protection and improvement or those that are provided to entities that meet the (European) requirements to be considered an innovative company.
• Those provided to entities that comply with the purpose of business promotion and reinforcement of the productive activity. In particular, it will be understood that companies that implement relevant business projects involving the development of new activities, products or markets, the expansion or consolidation of existing ones or the creation of stable jobs fulfill this purpose.
• Those provided for entities that are in the initial stage of development of a new business project or in its development phase, provided that they are micro, small and medium-sized companies with high growth potential.

What are technical or financial activities?

This shall be understood to include work provided for financial entities or work in the financial area provided for all types of entities, provided that in both cases said entities have published a sustainability report or non-financial management statement and this has been subject to verification by an independent expert.

The Law in this section refers to the framework of the United Nations and the OECD, the social policy of the International Labour Organization, the Global Reporting Initiative of the GRI (GRI Sustainability Reporting Standards) for the verification of this independent expert and the recognized international frameworks.

These types of activities need to be well justified and structured to benefit from the exemption.

How is the special regime calculated?

Con las reglas (y el programa) del IRPF anual haciendo un sencillo cálculo:

1. Queda exento el 15% del rendimiento íntegro.
2. Se detraen los gastos deducibles «normales»: Seguridad Social, mínimos por descendientes, aportaciones a planes de pensiones, en su caso) y
3. Se detraen los gastos deducibles «específicos» y relativos al traslado con un límite anual del 20% del salario. Estos son:

• Gastos de viaje y mudanza necesarios para el establecimiento en Bizkaia del o de la contribuyente, así como de los miembros de su unidad familiar. Se entenderán incluidos en este apartado los gastos correspondientes a viajes realizados a su país de origen, con el límite de dos al año.
• Gastos derivados de la escolarización en Bizkaia de las y los descendientes del o de la contribuyente.
• Gastos por cursos de euskera y/o castellano seguidos por el o la contribuyente u otro miembro de su unidad familiar.
• Gastos por el arrendamiento de la que constituya la vivienda habitual del o de la contribuyente en Bizkaia, así como los gastos originados por la contratación de servicios o suministros de la misma.

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.