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
10.9% top state + NYC 3.876%
New-York state income tax
New York State (10.9% top rate) plus New York City (3.876%) creates a combined rate of nearly 15% for NYC residents — the highest effective state+city income tax burden in the US. NYC finance, media, and tech professionals moving to Spain benefit enormously from Spain's Beckham Law. New York also has an aggressive 'domicile' test that can continue tax obligations for years after departure if not properly managed. Jacob Salama advises professionals and business owners from New-York 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 New York City, Buffalo, Rochester, Albany, Syracuse, 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 New-York 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 New-York 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 New-York 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.
New-York state income tax (10.9% top state + NYC 3.876%) ceases to apply once you properly establish non-residency in New-York. 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 New-York after departure; and (4) spending fewer than the statutory number of days in New-York 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.
New York State's top income tax rate is 10.9% on income above $25,000,000 (8.82% for most high earners, with the 10.9% rate applying to millionaires above $25M). New York City imposes an additional city income tax of up to 3.876%. New York is arguably the most aggressive state in the US for challenging post-departure residency. The New York statutory residency rule is particularly dangerous: if you maintain a permanent place of abode in New York (this includes a rented apartment, a family member's home, or a co-op unit) AND spend 183 or more days in New York in any year, you are treated as a New York resident on all income regardless of your domicile. Proper New York exit requires: (1) selling or definitively surrendering any New York home; (2) establishing a clear new domicile (Spain); (3) strict day-counting; and (4) filing a New York part-year resident return documenting the exact date of departure.
New York — particularly Manhattan and the wider Metro area — is a global centre for finance (Goldman Sachs, JPMorgan, Morgan Stanley, Citigroup, hedge funds, private equity), law, media and publishing, technology (the 'Silicon Alley' tech scene), real estate, fashion, and the arts. New York City generates some of the highest-income individuals in the world. Expats from New York moving to Spain are frequently hedge fund managers, private equity partners, investment bankers, senior attorneys, media executives, and tech founders.
For professionals relocating from New York to Spain, the Beckham Law (Article 93 LIRPF) — a flat 24% rate on Spanish-source employment income up to €600,000 for the first six years — can represent a substantial reduction in effective tax. Combined federal and New York rates can approach ~51.76%, making the Beckham Law's 24% flat rate particularly attractive.
| Scenario | Top Effective Rate | Approx. Tax on $180k Income |
|---|---|---|
| US — Federal (37%) + NY (~14.76% (NY+NYC)) | ~51.76% | ~$93,168 |
| Spain — Beckham Law (employment income) | 24% flat | ~€43,200 |
| Spain — Standard IRPF (no Beckham) | Up to 47% | ~€68,400+ |
New York does not tax Social Security income. Government pension income for New York state and local government employees (including police, fire, teachers) is fully exempt from New York state and city tax — a significant benefit for public sector retirees. Private pension and 401(k) income above $20,000/year is taxable at full rates. Moving to Spain changes the treatment of private pension distributions to Spanish IRPF.
Under the US-Spain Double Taxation Agreement, private pension and 401(k) distributions are taxable in Spain once you are a Spanish tax resident. The US may withhold at source, but this is creditable against Spanish IRPF. The Roth IRA creates a double-taxation risk — Spain does not recognise its US tax-exempt status. Pre-departure drawdown planning while still a New York resident (paying only federal tax, with no New York state tax on retirement income in many cases) can significantly reduce lifetime tax costs.
Key planning point for New York expats: New York hedge fund and private equity professionals who carry significant 'carried interest' positions face a specific cross-border complexity when moving to Spain. Carried interest is treated as capital gains in the US but may be characterised differently in Spain — potentially as employment income or business profit depending on the structure. The US-Spain DTA's capital gains and employment income articles will be in tension. Detailed analysis before the move is essential, as the difference between Spanish treatment as capital gains (19-28%) vs. employment income (up to 47%) on a multi-million carry is enormous.
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 New York 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 New York 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 New York: 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 New York City and Albany in the finance and technology sector are exploring remote work arrangements that allow them to live in Spain while continuing to work for their NY-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 New York residents preparing to move to Spain include:
Why specialist advice matters: Moving from New York to Spain involves simultaneous US federal, NY state, and Spanish tax obligations. General advisors typically lack the cross-border expertise to optimise all three at once. Jacob Salama advises New York nationals moving to Spain on the complete picture — from pre-departure planning through the first Spanish IRPF return and beyond.
Moving from New-York 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.