Mandatory Communications for the Special Tax Regime (“BecKham Law”)

Summary:

Not only must a formal request be made through form 149 to obtain the Special Regime, other circumstances also entail mandatory communications.

Mandatory Communications for the Special Tax Regime (“BecKham Law”)

For those taxpayers who have been granted with the Special Tax Regime (known as “Beckham Law“), it is important that they know their obligations in addition to the advantages they obtain from this regime, 

This regime may imply a series of communications, some of them mandatory and with certain deadlines. Not doing it properly or in time can have a significant negative impact on the Spanish taxation in Spain. 

Basically, apart from the formal request for the special regime, which entails the fulfilment of certain requirements and that there is a deadline to opt, there are three other relevant communications, which are also carry out through Model 149: 

1) Exclusion 

2) Resignation 

3) Departure 

In this post we want to focus on the third case: the one related to the departure. Therefore, regarding the other two cases, just to indicate: 

  • Exclusion:

Refers to the failure to comply with the requirements that gave right to the application and approval and implies that, if the requirements are breached, it is necessary to make a communication during the month following the breach.  

WATCH OUT!! The exclusion is retroactive. It does not matter at what time of year it occurs. It will be applicable since 1st January of the year in which it was communicated.  

  • Resignation:

if for any reason the taxation under the special regime is no longer beneficial a specific communication can be made. However, it must be done in advance during the months of November and December, prior to the corresponding tax year. Some planning would be necessary in case there are doubts as to whether this special regimen is still beneficial.  

IMPORTANT!! If this communication is not submitted on time, it is not possible to change the status regardless of whether it leads to a difference in taxes against the taxpayer. Only if there were circumstances of exclusion, change of tax residence or departure from the country, would there be other alternatives. 

  • Departure:

If the taxpayer is about to leave Spain (departure), we have two different scenarios:  

    • If the departure occurs before July and, therefore, the taxpayer will be considered a Non-Resident for tax purposes, there is no obligation to file a communication of the end of the special regime. The taxpayer will be subject to the Non-Resident Income Tax Law (IRNR) and, if applicable any tax treaty rulings.
    • If the departure takes place after July 1st, it is necessary to check if the taxpayer will continue to be resident for tax purposes in Spain for that tax year and if yes, the corresponding communication of form 149 will have to be present filed in the month following the departure. 

The consequences of not doing the correctly communications are: 

    • Taxation for all the employment income obtained from January 1st to December 31st. In other words, even if the income was received after the departure, for work performed outside of Spain and from a 100% non-Spanish employer, it would be subject to tax in Spain.  

If the corresponding communication is made through the form 149, the Spanish Tax Authorities will only request the taxation of the income received until leaving Spain. 

    • Limited application of a tax credit to avoid international double taxation that consists of the application a tax deduction limited to the 30% of the total tax. 

This means that, depending on the volume of income earned until departure and from departure, and the taxes paid abroad, it is possible that double taxation will not be eliminated. If the corresponding communication is made through form 149, it would not be necessary to declare the income from work obtained since departure and, therefore, there would be no double taxation to avoid. 

Do you still have queries?? Do not hesitate to contact us at info@albeatax.com.  

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