The Benefits of the Beckham Law for Expat Business Owners
When it comes to optimizing taxes as an expat business owner in Spain, the Beckham Law is a game-changer. Officially known as the Special Expat Tax Regime, this law allows qualifying individuals to pay significantly lower taxes on Spanish income. Originally introduced in 2005 to attract foreign talent, it has since become a favorite tool for entrepreneurs and digital nomads looking to reduce their tax burden while enjoying Spain’s vibrant lifestyle.
Let’s break down how it can work for you.
What is the Beckham Law?
The Beckham Law allows expats to pay a flat 24% income tax rate on their Spanish-sourced income for up to six years. For context, Spain’s standard income tax rates range from 19% to 47%, depending on income levels and regions. Additionally, foreign income (like dividends or remote earnings from a company outside Spain) is typically exempt from Spanish taxation, making it especially attractive for business owners.
Key benefits for expat business owners
1. Massive tax savings
For entrepreneurs or remote business owners who meet the requirements, the Beckham Law drastically reduces tax liability. Instead of the progressive tax brackets applied to Spanish residents, you enjoy a flat rate of 24% on the first €600,000 of Spanish income. This means more profit in your pocket, especially if you're running a high-earning business.
2. Exemption on foreign income
As an expat under this regime, income generated outside Spain is usually not subject to Spanish taxes. If your business serves clients abroad or earns dividends from foreign investments, these earnings can often remain untouched by Spain's tax system.
3. Streamlined tax reporting
The Beckham Law simplifies your tax obligations. You only report your Spanish income -no need to declare your worldwide earnings. Compliance becomes easier and less time-consuming, which is a relief for busy business owners.
4. Access to Spain’s lifestyle without full tax residency
Spain offers a high quality of life - stunning landscapes, world-class cuisine, and excellent healthcare. The Beckham Law lets you enjoy all this while maintaining a favorable tax status, avoiding the higher rates that full tax residents face.
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How business owners can qualify
Set up a Spanish company (SL)
One route is to incorporate a Sociedad Limitada (SL) in Spain and appoint yourself as director or employee. But here’s the catch: you must also be the administrator (admin) of the company to qualify under Beckham. Simply owning shares or acting as an employee doesn’t always cut it.
- Your salary will be taxed at 24% under Beckham.
- Dividends and retained earnings stay taxed at corporate rates (25%) until withdrawn.
- Note: this route doesn’t always work - some cases get rejected if the admin role isn’t considered a “true” employment.
Register as autónomo under “highly qualified individual” status
Another option is to work as a self-employed professional (autónomo) but meet the “highly qualified individual” (HQI) criteria. This typically involves:
- Earning a high salary (often over €60,000/year).
- Taking a strategic or specialized role (like a technical founder or professional expert).
Example:
You’re a software engineer earning €90,000 and working for your own Spanish entity. You can register as an autónomo, meet the HQI criteria, and apply for Beckham under that umbrella.
Launch a startup as a founder
Founders of innovative startups can also access the Beckham Law. If your startup is recognized as a “startup of interest” and you’re relocating to Spain to grow it, you may qualify.
- This path often involves getting a Spanish startup visa and proving your business plan.
- You’ll be an employee of your own startup (often via a Spanish SL).
Example:
You move to Madrid to launch a fintech app and draw a €70,000 salary from the startup. Under the Beckham Law, your Spanish income stays at the 24% flat rate, while your dividends from overseas remain untaxed in Spain.
Additional requirements for eligibility
To qualify:
- No prior Spanish residency: You must not have been a Spanish tax resident in the past 10 years.
- Timely application: Apply within six months of registering with Spain’s Social Security system.
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Practical examples for digital nomads and entrepreneurs
Example 1: Digital nomad with a foreign company
You run a remote-first marketing agency in Spain but serve clients in the UK. With the Beckham Law, your foreign income (€120,000) isn’t taxed in Spain - only the €30,000 you bill to Spanish clients is taxed at 24%.
Example 2: Startup founder with Spanish operations
You move to Barcelona to build a proptech startup focused on the Spanish market. You pay yourself a salary of €80,000, taxed at 24% under the Beckham regime, while your investment income from your previous UK exit remains untouched.
How to maximize the benefits
- Hire a tax advisor: Work with a professional who knows how to structure expat income to stay compliant.
- Set up your business carefully: Make sure your employment status meets the Beckham Law’s strict criteria.
- Apply on time: Don’t miss the six-month window.
Potential drawbacks to keep in mind
- The 24% rate applies only to Spanish-sourced income.
- It’s valid for six years - after that, you’re back to standard Spanish tax rates.
- Business owners need to structure carefully to avoid tax or compliance issues.
Final thoughts
For expat business owners in Spain, the Beckham Law offers a golden opportunity: lower taxes on Spanish income and no tax on your foreign profits for six years. Choose the best path - setting up a company, qualifying as a highly qualified autónomo, or launching a recognized startup - and you’ll keep more of your income while enjoying everything Spain has to offer.
But remember: the Beckham Law was designed with employees in mind. Business owners should always consult with a tax expert to ensure their setup truly qualifies.
