Jacob Salama · International Tax Lawyer · Colegiado nº 11.294 ICAMálaga
24%
Beckham Law flat rate on employment income
6 yrs
Duration of Beckham Law regime
13.3% top state rate
California state income tax
California has the highest state income tax in the US at 13.3% on income above $1M. California is notoriously aggressive in asserting continued residency after departure — proper domicile abandonment documentation is essential for any California expat moving to Spain to avoid continued CA FTB tax obligations. Jacob Salama advises professionals and business owners from California who are relocating to Spain on the full spectrum of US-Spain tax compliance: pre-departure asset planning, Beckham Law applications, FATCA, FBAR and Modelo 720 obligations, and ongoing dual-filing coordination. Whether you are based in San Francisco, Los Angeles, San Diego, San Jose, Silicon Valley, the planning principles are consistent — but the details depend on your specific circumstances and asset mix.
The 1990 US-Spain DTA (as amended by the 2013 Protocol) governs the allocation of taxing rights between the two countries. For US citizens — unlike nationals of any other country — the treaty's Saving Clause (Article 1(4)) preserves the United States' right to tax its citizens on worldwide income regardless of Spanish residence. A US national from California who becomes a Spanish tax resident remains fully subject to US federal income tax. The foreign tax credit mechanism under Article 24 of the DTA is the primary tool for avoiding economic double taxation, but its application requires careful sequencing with Spanish IRPF or Beckham Law calculations.
The Beckham Law (Article 93 LIRPF), as expanded by Spain's 2022 Startup Law, allows qualifying individuals becoming Spanish tax residents for the first time to be taxed at a flat 24% on Spanish-source employment income up to €600,000, rather than the progressive general IRPF rate (up to 47%). Most foreign-source income is excluded from Spanish IRPF during the Beckham period. For professionals from California earning in dollars from a US employer, this means: the Spanish salary is taxed at 24%, while dividends, rental income, and capital gains from US assets may be entirely outside Spanish IRPF. The application is made via Modelo 149 within six months of Spanish social security registration.
US nationals who move from California to Spain and become Spanish tax residents face three overlapping foreign asset reporting obligations. First, the FinCEN 114 (FBAR) requires disclosure of all foreign financial accounts exceeding $10,000 in aggregate at any point during the calendar year. Second, FATCA (Form 8938) requires separate disclosure of foreign financial assets above the applicable threshold. Third, Modelo 720 requires Spanish tax residents to declare foreign bank accounts, securities and real estate above €50,000 per category. Jacob coordinates all three streams to ensure full compliance and to identify voluntary disclosure opportunities where historical non-compliance exists.
California state income tax (13.3% top state rate) ceases to apply once you properly establish non-residency in California. The key steps involve: (1) establishing a new domicile in Spain (or another state before Spain); (2) filing a part-year resident return for the year of departure; (3) ensuring you do not maintain a permanent place of abode in California after departure; and (4) spending fewer than the statutory number of days in California in future years. The exact rules vary by state and some states (notably California, New York, and New Jersey) are particularly aggressive in asserting continued residency. Jacob advises on the state-level exit process as part of the integrated US-Spain move planning.
Spanish wealth tax (Impuesto sobre el Patrimonio) applies to tax residents on their worldwide assets exceeding the personal allowance (€700,000 for residents, plus an additional €300,000 for the primary residence). For expats from California with significant investment portfolios, property, or business interests, wealth tax is an important planning consideration. The rates range from 0.2% on the first tier to 3.5% on the highest. The choice of Spanish region of residence significantly affects wealth tax exposure: residents of Madrid enjoy a 100% bonificación (effectively zero wealth tax), while Andalucía has a 99% bonificación. In contrast, Cataluña and Comunitat Valenciana apply wealth tax in full. For high-net-worth individuals from California with substantial assets, the choice of Spanish region of residence can result in wealth tax differences of tens of thousands of euros per year.
Under the Beckham Law special regime (Article 93 LIRPF), Spanish wealth tax applies only to Spanish-located assets — not worldwide assets — for the duration of the regime. This is an additional major advantage of the Beckham Law for wealthy expats from California: for the first six years of Spanish residence, your US brokerage portfolio, IRA, 401(k), US real estate, and other US-located assets are entirely outside the Spanish wealth tax base. Once the Beckham period ends and you transition to the standard IRPF regime, worldwide wealth becomes assessable.
Many professionals from San Francisco, Los Angeles and San Diego in the technology and entertainment sector are exploring remote work arrangements that allow them to live in Spain while continuing to work for their CA-based employer. This arrangement raises specific tax and compliance questions that must be addressed before the move.
A well-structured pre-departure process can significantly reduce your total tax burden and avoid costly compliance failures. Key steps for California residents preparing to move to Spain include:
Why specialist advice matters: Moving from California to Spain involves simultaneous US federal, CA state, and Spanish tax obligations. General advisors typically lack the cross-border expertise to optimise all three at once. Jacob Salama advises California nationals moving to Spain on the complete picture — from pre-departure planning through the first Spanish IRPF return and beyond.
California has the highest state income tax rate in the US — 13.3% on income above $1,000,000 — and is the most aggressive state in the country when it comes to asserting continued residency after a claimed departure. The California Franchise Tax Board (FTB) employs dedicated residency audit teams and routinely challenges taxpayers who claim to have established domicile elsewhere. To successfully terminate California tax residency before moving to Spain, you must: (1) establish a new domicile in Spain (or an intermediate low-tax state) with clear, contemporaneous documentation; (2) sell or definitively give up any California home — the FTB treats maintenance of a California 'place of abode' as a primary indicator of continued California domicile; (3) update all indicia of residency (driver's licence, voter registration, banking, professional licences); (4) transfer any California-licensed professional licences to inactive status or to the new jurisdiction; and (5) file a California part-year resident return for the departure year, reporting only the income earned while a California resident. Be aware: California asserts continued residency based on a facts-and-circumstances test, and a poorly documented departure can result in California taxing your worldwide income for years after you believe you have left.
California generates some of the highest-income individuals in the world. The state's major economic drivers — technology (Silicon Valley, San Francisco, Los Angeles tech scene), entertainment (Hollywood studios, streaming services), venture capital and private equity, biotechnology (San Diego and Bay Area), real estate, and legal services — create diverse and complex financial profiles for expats considering a Spain move. Common California expat profiles include: technology company founders with significant equity (ISOs, NSOs, RSUs) in FAANG and venture-backed companies; venture capital partners with carried interest; entertainment industry professionals with complex multi-year income streams; biotech scientists and executives with milestone-based compensation; real estate investors with California rental portfolios; and high-net-worth individuals who want to restructure their tax profile by combining Spain residency with a thorough California exit.
For California-based professionals, the contrast between California's tax burden and the Beckham Law regime is particularly striking. The combined California + federal rate on the highest income tier exceeds 50% — among the highest in the developed world for employment income. The Beckham Law's 24% flat rate on Spanish-source employment income, combined with the exclusion of most foreign-source income from the Spanish tax base during the first six years, creates an extraordinary planning opportunity for California tech and business professionals willing to make a genuine move to Spain.
| Scenario | Top Effective Rate | Approx. Tax on $300k Income |
|---|---|---|
| US — Federal (37%) + CA (13.3%) | ~50.3% | ~$150,900 |
| Spain — Beckham Law (employment income) | 24% flat | ~€72,000 |
| Spain — Standard IRPF (no Beckham) | Up to 47% | ~€114,000+ |
California taxes 401(k) distributions and IRA withdrawals at its full income tax rate — up to 13.3% — in addition to federal taxes. For high-income California residents with substantial retirement accounts, pre-departure drawdowns (done strategically in lower-income years before Spain residency begins) can avoid paying both California tax and future Spanish IRPF on those distributions. Under the US-Spain DTA, pension and 401(k) distributions become taxable in Spain once you are a Spanish tax resident — and no longer subject to California tax after proper residency termination. The California FTB may still attempt to source retirement income to California if the income was deferred during California employment, though the legal basis for this is contested.
Key planning point for California expats: California's 13.3% top rate and aggressive residency posture make pre-departure planning especially critical. A poorly documented exit can result in California treating you as a continued California resident for years after your move — subjecting your Spanish salary, dividends, and capital gains to California tax in addition to Spanish IRPF. Jacob Salama works closely with California-experienced US tax counsel to ensure the California exit is watertight before the Spain residency begins.
Moving from California to Spain involves complex US-Spain tax interactions that general advisors miss. Jacob handles every private client case personally.
The content on this page is for general informational and educational purposes only. It does not constitute legal or tax advice and does not create a lawyer-client relationship. Tax laws change frequently and their application depends on individual circumstances. Always obtain specific professional advice before taking any action. Jacob Salama — Salama Legal SLP — is a registered Spanish lawyer (Colegiado nº 11.294, ICAMálaga) and is not authorised to provide US or UK legal advice.