Beckham law

The "Beckham Law" (Royal Decree 687/2005) is a Spanish Tax Decree passed in June 2005. The law gained its nickname after the footballer David Beckham became one of the first foreigners to take advantage of it. However the law is aimed at all foreign workers (particularly the wealthier ones) living in Spain. Upon application and acceptance, such individuals are liable only for Spanish taxes on their Spanish source income and assets.

Background

Under the Spanish tax law individuals who spend 183 days or more during a tax year in Spain are normally deemed tax resident. Temporary absences are ignored when determining residency unless a person can prove that he is a habitually resident in another country. Thus, footballers coming to Spain would automatically have become Spanish tax resident on the day count rule (over 183 days) and as Spanish residents would have been liable to Spanish tax on a worldwide basis.

However the Royal Decree 687/2005 modifies this law with respect to wealthy foreign workers. To ease the tax burden and to attract the likes of Beckham and top executives, the government introduced amendments to the definition of tax residency.

On June 10th, 2005 the Spanish government approved Royal Decree 687/2005 implementing the Personal Income Tax regulations in relation to article 9.5 of the Spanish PIT Law. The "Beckham law", as it is commonly known, regulates the procedure to apply for the new Spanish tax regime for expatriates in force since...
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