Recent developments for expatriate employees working in Spain and more security in application

​published on 3 August 2020 | reading time approx. 1 minute

In order to attract highly qualified workers, talent and executives to Spain, from a tax point of view, a tax scheme was introduced for employees sent to work in Spain (known as the Beckham Law).

Recently, amid the confusion of the current situation, the Spanish Tax Administration has resolved the binding query V0589-20, from the 16th of March, which we feel is worth mentioning because it offers the benefit of applying the tax advantages of flexible remuneration and also provides greater legal certainty by applying a standard to some of the flaws in the configuration thereof.

Remember that the optional expatriate scheme allows people who acquire their tax residence in Spain as a result of an employment transfer, to choose to pay taxes as non-residents, obtaining some tax advantages, provided they meet the following requirements:

• That they have not been residents in Spain during the ten tax years before they were sent to work within Spanish territory.
• That the displacement to Spanish territory occurs as a consequence of either of the following circumstances:
  • As part of the terms of an employment contract, with the exception of the special employment relationship of professional athletes.
  • As a result of the being appointed company administrator of an entity in which he or she is not a shareholder of the company or any related entity.
• That he or she does not obtain income that would be classified as obtained through a Permanent Establishment located in Spanish territory.

Through the scheme employees posted to Spain who meet the status of tax residents in Spain will be able to:

• Only pay Spanish taxes in Spain for income obtained in Spain.
• Pay a fixed tax rate of 24% on any income obtained for employment on anything under six hundred thousand Euros a year.

The aforementioned binding consultation (V0589-20), offers a series of benefits that make the displacement to our territory interesting, while it is established that certain tax except benefits will also be applicable to employees under the expatriate scheme while in Spanish territory including certain flexible remuneration items such as; restaurant tickets, health insurance and childcare benefits, etc. This means, the application of tax benefits has been officially extended, providing greater legal certainty in the practical application of this special tax scheme.