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
5% flat (+ 4% surtax above $1M)
Massachusetts state income tax
Massachusetts has a 9% effective rate on incomes over $1M (5% base + 4% 'millionaires tax'). Boston's Kendall Square biotech corridor, Route 128 tech strip, and financial district generate many high earners with complex equity — RSUs, ISOs, and carried interest. MA is known to assert residency aggressively; proper exit documentation is essential. Jacob Salama advises professionals and business owners from Massachusetts 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 Boston, Cambridge, Worcester, Springfield, 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 Massachusetts 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 Massachusetts 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 Massachusetts 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.
Massachusetts state income tax (5% flat (+ 4% surtax above $1M)) ceases to apply once you properly establish non-residency in Massachusetts. 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 Massachusetts after departure; and (4) spending fewer than the statutory number of days in Massachusetts 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.
Massachusetts historically had a 5% flat rate but introduced an additional 4% surtax (the 'Millionaires Tax') in 2023 on income above $1 million, bringing the top effective rate to 9%. Short-term capital gains and certain other income are taxed at 8.5% in Massachusetts. The Massachusetts Department of Revenue applies a statutory residency test — 183 days of presence in Massachusetts combined with maintaining a permanent place of abode triggers residency even if your domicile is elsewhere.
Massachusetts — particularly Greater Boston — is a global centre for biotechnology and life sciences (Moderna, Biogen, Vertex Pharmaceuticals, hundreds of Cambridge biotech startups), financial services (Fidelity Investments, State Street, Liberty Mutual), higher education and research (MIT, Harvard, scores of research hospitals), technology (Wayfair, HubSpot), and healthcare. Massachusetts expats moving to Spain are frequently biotech scientists and executives, asset management professionals, tech entrepreneurs, healthcare administrators, and university researchers.
For professionals relocating from Massachusetts to Spain, the Beckham Law (Article 93 LIRPF) — which allows a flat 24% rate on Spanish-source employment income up to €600,000 for the first six years — represents a potentially dramatic reduction in the effective income tax rate. When you factor in Massachusetts's state income tax rate of 9% on top of federal rates, the combined burden on earned income can approach ~46%. Under Beckham Law in Spain, Spanish-source employment income is taxed at just 24%, and most foreign-source income (dividends, capital gains, interest from US assets) falls entirely outside the Spanish IRPF base during the Beckham period.
| Scenario | Top Effective Rate | Approx. Tax on $180k Income |
|---|---|---|
| US — Federal (37%) + MA (9% (above $1M)) | ~46% | ~$82,800 |
| Spain — Beckham Law (employment income) | 24% flat | ~€43,200 |
| Spain — Standard IRPF (no Beckham) | Up to 47% | ~€68,400+ |
Massachusetts does not tax Social Security income. Most public pension income (for state and local government employees) is exempt. Private pension and 401(k) income is generally taxable at Massachusetts's standard rate. The 9% surtax on income above $1M can make large 401(k) distributions expensive in Massachusetts — pre-departure drawdowns while Massachusetts-resident (and subject to only federal + state tax) versus post-departure (subject to Spanish IRPF) require careful modelling.
Under Article 17 of the US-Spain Double Taxation Agreement (DTA), private pension and retirement account distributions (401(k), Traditional IRA, employer pension plans) are taxable in Spain — not the United States — once you are a Spanish tax resident. The US may withhold tax at source depending on the payer, but this withholding is creditable against your Spanish IRPF liability. The Roth IRA is a notable exception to this general rule: while the IRS treats Roth distributions as tax-free, Spain does not recognise the Roth's US tax-exempt status, potentially creating double taxation on Roth distributions. Planning your drawdown strategy before establishing Spanish residency is essential.
Key planning point for Massachusetts expats: Cambridge biotech founders and executives with significant unvested equity are among those with the most to gain from careful departure timing. Under the US-Spain DTA and Spanish sourcing rules, RSUs and options that vest after Spanish tax residency begins will generate Spanish-taxable income. However, the Beckham Law's 24% flat rate — applied to Spanish-source employment income — may make the total tax burden lower than continuing to work in Massachusetts and paying 9% state tax on top of federal rates.
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 Massachusetts 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 Massachusetts 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 Massachusetts: 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 Boston and Cambridge in the biotech and financial services sector are exploring remote work arrangements that allow them to live in Spain while continuing to work for their MA-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 Massachusetts residents preparing to move to Spain include:
Why specialist advice matters: Moving from Massachusetts to Spain involves simultaneous US federal, MA state, and Spanish tax obligations. General advisors typically lack the cross-border expertise to optimise all three at once. Jacob Salama advises Massachusetts nationals moving to Spain on the complete picture — from pre-departure planning through the first Spanish IRPF return and beyond.
Moving from Massachusetts 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.