The income tax of displaced workers in Spain („Regimen especial de trabajadores desplazados“, Modelo 151) - 7 typical questions about the income tax return


18th May 2019

 

In this article I answer 7 typical questions about the income tax return for those people who came to Spain for work and registered themselves in the Special Income Tax System for displaced workers ("Regimen especial de trabajadores desplazados", also known as "Beckham-Law").

 

[If you are a normal resident in Spain and not subject to this Special System, please read my article about the Spanish income tax for residents.]

1. Who has to file an income tax return as a displaced worker (Modelo 150/151)?

All those sent to Spain from abroad by their employers, as well as workers who have moved to Spain to take up an employment here, and who have registered for the application of the special taxation under the so-called "Beckham-Law", must file an income tax return.

 

If you came to Spain after January 1st, 2015, form 151 applies. If you came before that date, you can also choose form 150, which takes into account the regulations then in force.

 

The "Beckham-Law" is a special scheme under the Spanish Income Tax Law, whereby the persons concerned, although residents in Spain, are taxed as if they were non-residents.

2. Which income are taxed under this Special System?

a) income taxed under the "Beckham-Law":

As the name implies, the income tax taxes all "income", i.e. any income that a person earns or otherwise receives in any way.

 

Persons who are taxed according to the special regulations for displaced workers must report the following income, but only if they have been obtained in Spain, i.e. from Spanish sources:

  • Income from employment (salary);
  • Social benefits (such as unemployment benefits), pensions, severance payments;
  • Income from real estate (mainly rental income);
  • Income from movable assets (interest, dividends, insurance payments, patent rights, etc.);
  • Income from self-employment (without permanent establishment in Spain);
  • Capital gains (for example from the sale of Spanish real estate, shares, etc.);
  • Lottery winnings, damages, subsidies received (from the state or province);
  • Special rules ("imputación de rentas") apply to vacant properties or their rental to family members.

Important: income from employment is an exception of the rule of Spanish source:

In this case, the entire income from employment from all over the world is treated as if it had been obtained in Spain and is thus fully taxed. It is possible to deduct taxes paid abroad for that income to some extent.

b) income from donations and inheritances:

Income from donations and inheritances are not taken into account in the income tax return, they do not have to be indicated. Those income have their own taxes. So if your received a donation, you have to pay donations tax (within 30 days after the donation). If you inherited something, you have to pay inheritance tax (within 6 months after the date of death).

3. Is it always necessary to file an income tax return?

Yes, who is included in the Special System for displaced workers always has to file an income tax return. 

4. What is better: individual or joint return?

In Spain, there is usually the possibility to file a joint income tax return for members of a so-called "family unit" ("unidad familiar"). However, there is no such possibility when applying the special rules for displaced workers. The respective taxpayer is always assessed alone and personal circumstances are not taken into account.

5. How much is the income tax for displaced workers?

There are two types of income in the case of displaced workers which are taxed at different rates:

a) income named in article 25.1.f) of the Income Tax Law for Non Residents („IRNR“):

Interest, dividends and capital gains are taxed with 19% for income of up to € 6,000, with 21% for up to € 50,000, and beyond with 23%.

b) all other income:

Income from work, rental of Spanish real estate, etc. are taxed with 24% up to € 600,000, beyond that with 45% (other rates apply to those who came to Spain before 2015).

6. Until when do you have to file the tax return (form 151)?

Displaced workers have to file their income tax return regarding 2018 until the 1st of July of 2019

If you want the Tax Office to directly debit the amount to pay from your bank account, it is mandatory to file the tax return until the 26th of June of 2019.

7. How can you submit your income tax return?

You can either fill in and file your tax return yourself or have it prepared and submitted by a tax advisor

a) fill in and file the income tax return on your own:

As a displaced worker, you can fill in and file your income tax return by yourself through the website of the Spanish Tax Office.

There is no so-called "borrador" (draft) in this case, but you have to declare your income and withheld income tax by yourself, as well as possible deductions for donations or taxes already paid abroad.

b) get the income tax return prepared and submitted by a tax consultant:

Of course you can also have your income tax return prepared and filed by a tax consultant. This saves time and nerves and is especially recommendable for those who do not speak Spanish very well or have multiple income from different sources.


Conclusion:

This article is intended to give an overview of the subject of the income tax return for individuals under the special regime applicable to workers relocated to Spain ("Regimen especial de trabajadores desplazados", so-called "Beckham-Law", Modelo 151). In no case can the article replace a personal consultation and analysis of the individual case.

 

The deadline for filing the income tax return for displaced workers is the 1st of July of 2019. However, if you want the payment to be debited, you must submit the declaration by 26th of June at the latest.

 

The income tax return for workers relocated to Spain is relatively straightforward, since the personal situation is not taken into account and there are hardly any deductions. Therefore, those who speak Spanish, will probably be able to do the tax return on their own.

 

If you do not speak Spanish very well or if it is your first income tax return in Spain, I would however recommend you to get it prepared and filed by someone who is familiar with Spanish taxes.

 

You would like to make your tax declaration by yourself, but have questions about some points? Please feel free to arrange a consultation with me!

 

You don´r really have the time or just don´t feel like doing your tax return, reading endless instructions and being on hold at the Tax Office? No problem: Just let me prepare your income tax return!

 

I request all necessary information from you, answer your questions, prepare the tax return and submit it after your OK. 

It is that easy.