Priya's year, one income at a time
Priya Raman is British and since January has worked in Madrid as finance director of a Spanish company, earning 150,000 € a year. She is in the regime of article 93, commonly called the Beckham regime. Her wealth did not stay in London by chance: she has a flat there that is let and brings her 18,000 € a year, she receives about 9,000 € of dividends from US shares, she holds a portfolio in an Irish fund that she plans to sell this year with a gain of 40,000 €, and in March she received a 25,000 € bonus from her former British employer for 2025 targets, when she was still living in London. She also keeps shares in a Spanish bank that pay her 4,000 € of dividends.
When she asked us which of all that went to Spain, she expected a simple answer. There is one, but with an exception that turns intuition on its head.
The principle: the regime borrows the rules for non-residents
Article 93.2 of the IRPF Law (Spanish personal income tax) provides that a taxpayer in the regime works out their tax under the rules of IRNR, the Spanish non-resident income tax, for income obtained without a permanent establishment. A non-resident is only taxed in Spain on what is treated as obtained in Spanish territory, and article 13 of the consolidated text of that tax sets out the list: dividends from entities resident in Spain, interest paid by residents, income from property located here, gains on securities issued by resident entities, among others.
That means that, for most income, the regime works as if Priya did not live in Spain. What does not arise here does not come in.
The exception that changes everything: employment
Article 93.2.b lays down the opposite rule for employment: all the employment income obtained during the regime is treated as obtained in Spain. It does not matter that the payer is foreign or that the days are worked in another country. If Priya spends a week in Frankfurt closing a deal, that salary is still taxed in her Spanish return.
Article 114.2.a of the IRPF Regulations sets the time limit: income deriving from an activity carried out before the move to Spain is not treated as obtained during the regime. The 2025 bonus rewards work done in London before she arrived, so it does not come in under the special rule. It would only be taxed here if it were Spanish-source income under the non-resident rules, and work performed in the United Kingdom is not.
Priya's table
| Income | Amount | In Modelo 151? | Why |
|---|---|---|---|
| Salary from the Spanish company | 150,000 € | Yes | Employment during the regime |
| Dividends from the Spanish bank | 4,000 € | Yes | Entity resident in Spain |
| Dividends from US shares | 9,000 € | No | Non-resident issuer |
| Rent from the London flat | 18,000 € | No | Property outside Spain |
| Gain on the Irish fund | 40,000 € | No | Securities issued outside Spain |
| Bonus for 2025 targets | 25,000 € | No | Work before the move |
Of 246,000 € of income, 154,000 € goes into the Spanish return, Modelo 151, the regime's annual return.
The calculation, step by step
The regime distinguishes two blocks. The income in article 25.1.f of the consolidated IRNR text, which covers dividends, interest and gains on disposals, goes onto a savings scale; everything else goes onto the regime's general scale.
- Employment: 150,000 × 24 % = 36,000 €. Nothing is deducted: article 24.1 of the IRNR Law takes the gross amount with no reductions, and in this regime there are no deductible expenses or personal allowances.
- Spanish dividends: the 4,000 € falls entirely within the first band of the savings scale in article 93.2.e.2.º, at 19 %: 4,000 × 19 % = 760 €.
- Total gross tax: 36,000 + 760 = 36,760 €.
- Withholding: the company has withheld 24 % of the salary, 36,000 €, and the bank will have withheld tax on the dividends. That withholding is deducted from the tax due.
The income left outside does not disappear: the United Kingdom, the United States or Ireland may tax it under their own rules. How they do so is something Priya's adviser in each of those countries has to confirm. We do not give opinions on foreign law, but we coordinate with whoever she appoints so that the pieces fit.
If an item of income does not go into Modelo 151, the tax paid on it abroad cannot be deducted in Spain. The regime's double taxation deduction, provided for in article 114.2 of the Regulations, is limited to employment income and entrepreneurial income obtained abroad, and it is capped as well: 30 % of the part of the gross tax that corresponds to that income.
The trip to Frankfurt: when employment income is taxed in two places
Suppose Priya spends 20 working days in Germany and that, according to the adviser she appoints there, Germany taxes the part of her salary for those days, 12,000 €. In Spain those 12,000 € are still inside the 150,000 €. The corresponding Spanish tax is 12,000 × 24 % = 2,880 €. Article 114.2.b of the Regulations limits the deduction to 30 % of the gross tax corresponding to that foreign income: 2,880 × 30 % = 864 €. If the German tax was higher, the difference cannot be recovered this way. It is an asymmetry worth knowing about before you accept a post with a lot of travel.
We explain the general mechanics of the deduction in the guide on international double taxation.
Three points that are easily missed
The source decides, not the bank account. A dividend from a Spanish company received in a Geneva account is Spanish income. A gain on a Luxembourg fund paid into an account in Madrid is not.
Foreign companies holding Spanish property. Article 13.1.i.3.º of the IRNR Law treats as obtained in Spain gains on the transfer of shares in entities, resident or not, whose assets consist mainly of property located here. If Priya's Irish fund were in fact a company whose assets are flats in Barcelona, the gain would come in. We develop this in selling shares bought before arriving.
Wealth follows the same logic. Article 93.1 provides that anyone who opts for the regime is subject to Spanish wealth tax on a territorial basis only: just the assets and rights located or exercisable in Spain count. The London flat and the US portfolio are left out; the shares in the Spanish bank are in.
What you should keep in order every year
| Document | What it is for |
|---|---|
| Employer's withholding certificate | Reconciling employment income and tax withheld in Modelo 151 |
| A record of days worked outside Spain | Supporting any double taxation deduction |
| Dividend statements showing the issuer's country | Separating Spanish from foreign income |
| Purchase documents for every investment | Working out gains today and when the regime ends |
The last point looks unnecessary while sales stay out, but the regime lasts for the year of the move and five more, and when it ends worldwide income is taxed in Spain again. What we explain in the year after the regime ends starts to be prepared with these papers.
If you have income in several countries and want to know which items go into your return, you can describe them on the Beckham form. The guide what goes into Modelo 151 gives a broader review by type of income.
Reviewing each item of income by its source, year after year, is the basis of the work we describe on the Salama Tax page on the regime for workers moving to Spain, which also explains how we coordinate with the client's adviser in other countries.