The article 93 regime, the special regime for people who move to Spain known as the Beckham regime, lasts for the year of the move and the five years that follow. That sounds like a long time in the first year and like very little in the fifth, which is when it is worth starting to prepare the exit. Because leaving is not simply a matter of no longer filling in one form: it means switching to a whole different tax system, with another scale, other reporting obligations and another wealth tax, all on the same 1 January.
The three ways out
| How | When it is notified | Effect |
|---|---|---|
| By running out of time | Nothing needs to be notified | The regime stops applying after the fifth tax year following the year of the move |
| By renouncing it | Modelo 149, in November or December of the year before the one in which you want it to stop applying | Voluntary, within a fixed window |
| By exclusion | Modelo 149, within one month of the breach | The conditions of the regime are no longer met |
Anyone who renounces or is excluded cannot apply the regime again for that move. It is not a revolving door: you go through it once and in one direction. That is why a renunciation is calculated, not guessed, and calculated with the years still ahead, not with the tax year that is closing.
What exactly changes in the first ordinary year
This is the table we show at the first exit meeting, because it sums up six changes that arrive together:
| Item | Under article 93 | Under ordinary IRPF |
|---|---|---|
| Income that is taxed | Worldwide employment income and Spanish-source income | All worldwide income |
| Scale | The regime's rates, with a higher rate above a certain level of general income | Progressive national and regional scale |
| Allowances, reductions and credits | Practically none | Whatever applies to your situation |
| Return | Modelo 151 | Modelo 100 |
| Wealth tax | Territorial basis: only assets in Spain | Personal basis: worldwide wealth |
| Modelo 720 | Not filed | Filed if the thresholds are exceeded |
The last two rows are the ones that catch most people unawares, and they deserve a section of their own.
The Modelo 720 that appears all at once
While the regime lasts there is no obligation to file Modelo 720, the information return on assets and rights held abroad, because someone under article 93 is not taxed on the whole of his or her income. In the first tax year taxed under ordinary IRPF, the standard Spanish personal income tax, that obligation arises, and it is met between 1 January and 31 March of the following year.
What matters is that it arises going forward. The years you spent under the regime do not create overdue returns and there is nothing to regularise for them: there was no obligation, so there is no breach. What there is, is a first Modelo 720 that tends to be the most laborious of all, because what has been abroad for years has to be listed and valued from scratch: accounts, portfolios, pension plans, insurance policies, properties. How it is grouped is explained in the three blocks and the €50,000 threshold; how it is filled in, in how to fill in Modelo 720, block by block.
Gathering certificates of the average balance for the last quarter, net asset values and surrender values from institutions in four countries cannot be done in a fortnight, still less with the holidays in between. We ask clients leaving the regime for their list of institutions in the autumn, before the tax year closes, precisely so that in January only the figures are left to collect.
Wealth tax, which becomes worldwide
During the regime you pay Spanish wealth tax only on assets located in Spain. Once you leave it, you are taxed on all your wealth, wherever it is, with the tax-free allowance and the rules of the Spanish region where you live. For someone who arrived with wealth built up abroad, that change can weigh more than the difference in income tax rates, and it is a calculation that can be done two years in advance. The details are in who has to file a wealth tax return and in how assets are valued.
Planning the final year, without hype
This needs precision, because a lot of nonsense gets written about it. What is true is this: while the regime lasts, foreign-source income other than employment income is not taxed in Spain. Once you are out, it is. That asymmetry means that the tax point of certain transactions has very different consequences depending on whether it falls inside or outside the regime.
- Selling foreign shares or funds. Inside the regime, the gain is not taxed here; outside it, it goes into the savings base.
- Foreign-source dividends and interest. Same reasoning, with the nuance of withholding at source, which is borne in both scenarios.
- Equity. Exercising options or receiving shares is employment income and is taxed inside the regime at the regime's rates; outside it, at the general scale with everything that implies. We develop this in equity during the regime.
- Cashing in foreign pension plans. Their classification and treatment change, and not always for the better.
And now the warning, which is as important as the list: the tax point is set by the law, not by what suits you. A sale is taxed when the transfer happens, not when you sign an intention; a share award, when the shares are delivered under the plan, not when it suits you. Bringing forward transactions with no substance so that they fall inside the regime is exactly the kind of thing a tax audit looks at closely. We put the scenarios into numbers and warn you of the risk; we do not guarantee that the tax authority will share our classification, and we say so in writing beforehand, not afterwards.
Renouncing, step by step
You file Modelo 149 ticking the renunciation, in November or December of the year before the one in which you want the regime to stop applying. From the following 1 January you are taxed under ordinary IRPF, with everything the table above brings with it. It makes sense when the general scale with its allowances, reductions and credits comes out better than the regime's rate: families with children, middle incomes, generous regional credits, or a year with losses that can be offset.
It almost never makes sense when there is significant wealth outside Spain, because renouncing triggers Modelo 720 and worldwide wealth tax a year earlier than would otherwise happen. It is a two-column calculation, and it is done with figures, not impressions.
Exclusion, and its grey area
Exclusion applies when the conditions of the regime stop being met, and it has to be notified within one month of the breach. Which breaches lead to exclusion and which do not is one of the least clear-cut areas of article 93, and it depends a great deal on the route by which you came in: a change of job within Spain is not the same as the end of the relationship that gave access to the regime, nor is it the same for a seconded employee as for a director whose shareholding percentage moves.
Our advice does not change: when a change can be foreseen (a dismissal, a reorganisation, a capital increase that alters your percentage, a transfer to another country within the group) it is analysed before it happens. Afterwards, the one-month limit keeps running while you decide what to do.
An eighteen-month exit calendar
| When | What is done |
|---|---|
| Year 5, spring | Confirm which is the last tax year of the regime and whether renouncing earlier is worthwhile |
| Year 5, autumn | Inventory of assets abroad and simulation of the first ordinary year |
| Year 5, November or December | Renunciation window, if the calculation recommends it |
| Year 6, during the tax year | Put transactions with a debatable date in order and document each one |
| Year 7, January to March | First Modelo 720, if the thresholds are exceeded |
| Year 7, income tax campaign | First ordinary return and first wealth tax return on a personal basis |
Whoever follows that calendar reaches the change without any shocks. Whoever discovers it in April of year 7 has an overdue Modelo 720, an income tax return prepared on the old regime's criteria, and a half-finished inventory.
What stays the same when you leave
Not everything changes. You are still tax resident in Spain, with the same NIF, the Spanish tax number, and the same tax address, and the obligations of any business activity (VAT, withholding on payments to third parties, census forms) stay where they were, because they never depended on article 93. Your position with Spanish social security does not change either.
And there is one thing that gets better: from that point the personal and family allowances apply, as do the national and regional reductions and credits, and losses can be offset under the ordinary rules. For profiles with a family and middle incomes, the change is not always for the worse. Doing the comparison under both scenarios is precisely what lets you decide whether to renounce early or run the regime to its end.
And if what you are doing is leaving Spain
Then the regime ends by another route: you stop being an IRPF taxpayer. The year in which that happens has to be looked at with the 183-day test and with the treaty with the destination country, and whatever Spanish-source income remains is then declared under the IRNR, the Spanish non-resident income tax, on Modelo 210. If you also keep your home in Spain, the mechanism we explain in imputed income comes into play.
How we work on it
Leaving the regime is one of the few tax jobs that is done better with a year and a half's notice: we identify the last tax year of the regime, draw up the inventory of assets abroad, simulate the first ordinary year with the region you will be living in and put in order the transactions whose date is open to debate. The Beckham regime form serves for this as well: tell us the year you came in and what you own abroad, and we will tell you what awaits you and when.