Beckham Law: benefits, requirements and how to apply for foreign doctors

In an increasingly globalised world, the mobility of health professionals is a constant reality. Spain, renowned for its healthcare system, quality of life and job opportunities, is an attractive destination for foreign doctors wishing to pursue their career in the country.

Among the tax advantages offered by Spain is the so-called Beckham Law, a special tax system that provides significant benefits to relocated workers, including doctors seeking to establish themselves in the Spanish healthcare system.T

This article explains what the Beckham Law is, its requirements and tax advantages, and how to apply for it in 2024, with a special focus on foreign doctors.

What is the Beckham Law and who does it apply to?

The Beckham Law, officially known as the Tax System for workers relocated to Spanish territory or Special System for impatriates (article 93 of the Spanish Personal Income Tax Act), enables foreign professionals to be taxed in Spain with a favourable tax treatment.

This system, initially designed to attract talented athletes, has been extended in recent years to other groups, including managers, entrepreneurs and highly qualified professionals, such as foreign doctors wishing to work in the Spanish healthcare system.

Eligibility requirements for the 2024 Beckham Law in Spain

To qualify for the Beckham Law, taxpayers must meet a number of conditions, including:

1. Not being tax resident in Spain for the 5 tax periods prior to the move.
2. The move to Spanish territory must be as a result of signing an employment contract, acquiring the status of director or carrying out entrepreneurial or highly qualified activities.
3. Not receiving income classified as being obtained through a permanent establishment located in Spanish territory.

For foreign doctors, this means that they must have an employment contract with a Spanish healthcare institution or company in the healthcare sector and not be tax resident in the country in the previous five years.

Deadline and procedure for applying for the Beckham Law

To benefit from this system, the application must be submitted within the first six months of arrival in Spain. The procedure is carried out through Form 149 , which must be submitted to the Tax Agency.

Once the application is accepted, the taxpayer must file Form 151 annually, which replaces the usual tax return.

Tax benefits of the Beckham Law

The main benefits of the Beckham Law include:

1.  Flat rate of 24% on personal income tax for annual income not exceeding €600,000:
   o The main tax advantage of this system is that the income obtained in Spain (with some special features) is taxed at a flat rate of 24% (when the taxable income does not exceed €600,000) and 47% when the taxable income exceeds that amount.
   o This enables those who apply the special system to avoid using the general tax scales (national and regional), thus bypassing the progressive nature of personal income tax while reducing in most cases the tax payable to the Treasury for the income received as relocated workers.
2. Taxation solely on the income obtained in Spain, without the obligation to pay tax on the worldwide income.
3. Wealth tax limited to the assets and rights located in Spain.
4. Exemption from filing Form 720, which requires tax residents to declare assets abroad.

For foreign doctors, this is a great advantage since they will benefit from reduced taxation in the first years of their career in Spain, without their income abroad being taxed by the Spanish tax authorities.

Recent developments regarding the Beckham Law in Spain

The Startup Act of December 2022 established the possibility for foreign workers moving to Spain for entrepreneurial or high-skilled activities to benefit from the Beckham Law. Nevertheless, until now, the absence of a specific regulation had left those professionals in a “tax limbo”.

• The recent Ministerial Order HFP/1338/2023 of 13 December redresses that loophole, enabling those workers to apply for the special taxation under the Beckham Law retroactively.
• A period of six months is established for taxpayers who acquire their tax residence in Spain during the 2023 tax period, as a result of a move in 2022 or 2023, to apply for this tax system.

In short, the recent resolution from the Spanish Finance Ministry provides clarity and certainty to foreign workers who moved to Spain in 2022 or 2023, offering them the possibility of benefiting from the Beckham Law retroactively and establishing it as a tax system of interest for the foreign doctors who consider working in the Spanish healthcare system, provided that they meet the requirements set out in the Law.

Who should apply for the Beckham Law?

This system is recommended for professionals who expect to earn a high income in Spain since it avoids the progressive nature of personal income tax and enables them to be taxed at a flat rate of 24%. However, each individual situation must be assessed since in some cases it may be more beneficial to be taxed under the general system.

For foreign doctors, the decision will depend on the type of contract and the expected remuneration since it is an attractive option for those with high salaries and job stability in the country.

Conclusion

The 2024 Beckham Law in Spain remains an attractive tax option for relocated workers, especially for foreign doctors wishing to pursue their career in Spain.

If you want to know more about how to apply for this system or if you need tax advice, contact us and we will help you resolve all your doubts.