The Beckham Regime Yearly Return: Form 151

People under the special regime for inbound workers do not file the ordinary Spanish income tax return. They file form 151, between April and June, and it works on a different basis:

• Employment income is taxed in Spain in full, wherever the work was done, at 24 % up to €600,000 and 47 % above.
• Other income is taxed only if it has a Spanish source. Dividends from a foreign company, interest on a foreign account or rent from a property abroad stay outside.
• Spanish-source savings income (dividends, interest, gains on Spanish assets) is taxed on the savings scale, from 19 %.
• No personal or family allowances, no joint return, and most ordinary deductions do not apply.

The practical consequence is that the return looks simple and is easy to get wrong. The usual errors are including foreign investment income that should be left out, leaving out employment income paid from abroad that should be in, and applying allowances that belong to the ordinary regime.

For many people in the regime, the largest item is not salary. Stock options exercised, restricted stock units that vest and employee share plan discounts are employment income. Under the regime they are taxed in Spain at the flat rate in the year they are received, including, in general, the part that relates to work done before arriving.

That raises three questions each year: in which year the income arises, how much of it another country also claims, and what relief is available for tax paid there. The answers depend on the plan and on the treaty. The underlying rules are covered under stock options and RSUs; the yearly return is where they are applied.

The regime applies in the year you become resident and the five that follow. It ends earlier if you stop meeting its conditions, for instance if the employment that justified it ends and is not replaced within the permitted time, or if you waive it. Exclusion and waiver are notified on form 149, with deadlines.

The last year deserves planning. From the seventh year you are an ordinary resident: worldwide income is taxed on the progressive scale, foreign assets become reportable on form 720, and wealth tax covers assets everywhere. Decisions such as selling shares, drawing a bonus or restructuring investments are often better taken before that date than after. We raise it with you a year ahead.

• Form 151, with employment income, equity and Spanish-source income placed in the right year.
• A record of the six years, with advance notice of the exit.
• A yearly check that the conditions of the regime are still met, and that it still suits you.
• Coordination with whoever files for you in your country of origin, so that the same income is described in the same way in both.

The fee is €520 a year, taxes included. The initial application is separate work, described under Beckham law. Extending the regime to a spouse and children is quoted from €460.

• Filing the ordinary return out of habit, or because the tax agency's draft offered it.
• Declaring foreign dividends and gains that are outside the regime.
• Leaving out a bonus or equity award paid by the foreign parent company.
• No Spanish withholding on employment income paid from abroad, discovered at filing time as a large balance to pay.
• Filing form 720 unnecessarily, or failing to start filing it in the first year after the regime ends.
• Asking for an ordinary treaty residence certificate, which is not issued to people under the regime.