New Tax regime for investors and entrepreneurs.

Good news for Investors, Entrepreneurs and, in general, Private Individuals, whether U/HNWI or not, willing to invest, set up an activity or not but probably moving to Spain: It has been approved today Friday 15th December, after 359 days waiting, the application form (as well as tax return for annual filing) for the new Impatriate Regime (so called Beckham Law).

The publication of this “ministerial order”, the long legislative journey comes to an end, which after the change of the regulation at the end of 2022 with the new Start-Ups Law that modified the Personal Income Tax Law 35/2006, we had to wait for having also modified the Personal Income Tax Regulations as well as to approve the formalities related to the application model of the regime as well as the tax return that every year for 6 fiscal years will have to be prepared and filed by taxpayers who are granted this regime. 

Therefore, individuals which otherwise would become fully liable to income tax as well as wealth tax on a worldwide bases in Spain may elect, if possible, a limited liability tax regime where 24% flat rate for income tax will apply (instead of progressive rates up to 47%) and zero wealth tax for assets held outside Spain. Spanish assets may have an exemption for wealth tax of up to 6 million for a couple.

Thus, Non-Spanish Dividends, Interest, Capital Gains, Rental Income, Business Income not located in Spain and any other items of income or gains, apart from salary, will be zero taxed in Spain whether they were subject to tax or not abroad and whether the tax treaties are applicable or not. Different from other countries beneficial tax regime, the Spanish impat regime does not focus on foreign tax treatment. Actually, annual reporting of foreign assets and foreign income will not apply to Impatriate Taxpayers! There are also some other benefits like no CFC, Exit tax, etc.

This regime, which is applicable for 6 years, is also link in some cases with the start-up law that was approved 12 months ago (which also brings some tax corporate tax incentives). Once the regime is over, there are also some other tax incentives as well as exemptions for business activity and private wealth taxation. The good point of the present tax regime is that is not only address to employees or directors of foreign companies but also to entrepreneurs who want to set up either a new business in Spain or perhaps a subsidiary or branch of their foreign business.

Additionally, entrepreneurs, self-employed and digital nomads may benefit of the tax benefit if the conditions are met. We may share more information and the conditions and requirements to apply for it.

From the international team in our firm, we have been advising and assisting businessmen and professionals to plan their global tax situation, avoid double or triple taxation situations and reduce tax risks that may arise due to an incorrect compliance of the tax obligations.

For more information, to solve any doubt or to request a proper advice, do not hesitate to contact us.