The Beckham Law is a popular tax regime for expats in Spain, but how does it compare to other tax schemes available globally? This guide provides a comparative analysis of the Beckham Law and other prominent expat tax schemes, highlighting the differences in benefits, eligibility, and application processes.
Table of Content
Beckham Law Overview
The Beckham Law offers significant tax benefits to high-income earners relocating to Spain. Key features include:
- Flat Tax Rate: 24% on income up to €600,000, and 47% on income above this threshold.
- Exemption from Global Income: Only Spanish-source income is taxed.
- Eligibility: Available to those who have not been residents in Spain for the past ten years and who have a Spanish employment contract.
Other Prominent Expat Tax Schemes
Portugal’s Non-Habitual Resident (NHR) Regime
- Flat Tax Rate: 20% on Portuguese-source income for high-value activities, and exemption on foreign income for the first ten years.
- Global Income Exemption: Similar to the Beckham Law, the NHR regime exempts foreign income from Portuguese taxes.
- Eligibility: Must not have been a tax resident in Portugal in the previous five years.
United Kingdom’s Non-Domicile Tax Regime
- Remittance Basis: Tax on UK income and remitted foreign income, with unremitted foreign income exempt from UK taxes.
- Flat Fees: Annual charges apply after seven years of residence, starting at £30,000.
- Eligibility: Available to individuals who are UK residents but not domiciled in the UK.
Italy’s New Resident Regime
- Flat Tax: €100,000 annual flat tax on foreign income for up to 15 years.
- Global Income Exemption: Foreign income is exempt from Italian taxes, aside from the flat tax.
- Eligibility: Must not have been an Italian tax resident for the nine of the ten previous years.
Comparative Analysis
Tax Rates and Savings
- Beckham Law: 24% on Spanish income up to €600,000 is advantageous for high-income earners.
- NHR Regime: The 20% flat rate in Portugal and the ten-year exemption on foreign income can offer greater savings, especially for those with substantial foreign income.
- Non-Dom Regime: The UK’s remittance basis can be beneficial for those with significant unremitted foreign income, but the annual charges can add up over time.
- New Resident Regime: Italy’s flat €100,000 tax is straightforward and beneficial for extremely high earners with substantial foreign income.
Global Income Treatment
- Beckham Law: Only Spanish-source income is taxed, exempting global income.
- NHR Regime: Exempts foreign income for ten years, similar to the Beckham Law but with a broader scope.
- Non-Dom Regime: Only remitted foreign income is taxed, offering flexibility but with annual charges.
- New Resident Regime: A flat tax on all foreign income simplifies the process but may not be as advantageous for lower foreign incomes.
Eligibility and Application
- Beckham Law: Requires not having been a Spanish resident for the past ten years and having a Spanish employment contract.
- NHR Regime: Requires non-residency in Portugal for the previous five years.
- Non-Dom Regime: Available to non-domiciled UK residents, with no specific prior residency requirement.
- New Resident Regime: Must not have been an Italian tax resident for nine of the ten preceding years.
Conclusion
Each tax regime offers unique benefits and caters to different financial situations and residency histories. The Beckham Law is particularly advantageous for high-income earners working in Spain, but other regimes like Portugal’s NHR and Italy’s New Resident Regime may offer better benefits for those with substantial foreign income. Understanding these differences can help expats choose the most beneficial tax scheme for their circumstances. For personalized advice, consulting with a tax professional familiar with these regimes is recommended.