How the Beckham Law can benefit if relocating for work from Limerick to Spain

Question
Liam, I’ve been made redundant from my HR position in Ireland which came as a huge surprise to me because I was the lead for the company I worked for. Anyway, I’ve gotten over it and I’m exploring new job opportunities, and one offer I’ve received is based in Barcelona and it’s something I’m giving serious thought to. I’m not sure if you know anything about their tax or pension system but if you do, any advice would be appreciated.

Answer
Unfortunately I don’t know very much about either other than knowing that there is a law named after the ex-footballer David Beckham that is very advantageous from a tax perspective.
The Beckham Law was introduced by the Spanish to attract foreign talent and skilled professionals to come and live and work in Spain. And what it basically offers is a tax rate of 24% on Spanish based earnings up to a limit of €600,000 in annual earnings.

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This 24% rate is particularly attractive because income tax rates can be as high as 47% but that will depend on where you live in Spain and how much you earn.
And even though the Beckham Law came into being and was named after a professional footballer, ironically now professional sports players can no longer benefit from it. I’m not sure why, but there you go. It’s probably because they earn so much and would move to Spain anyway to play football that why give them such a tax break especially when it would take most people years to do what they earn in a week.
Anyway, with the Beckham rule, the Spanish consider you a non-resident even if you are living in the country. However, the lower tax rate doesn’t stay in place forever. The time limit is six years and if you are still there in year seven, you’re taxed at the same rate as Spanish residents pay.
And there are some eligibility criteria you have to pass to avail of the 24% rate and they are:
1. You haven’t been a tax resident in the previous five years before moving to Spain
2. You’re moving to Spain for work purposes and you either have a job offer from a Spanish company or you are working for a foreign company, have a Spanish digital nomad visa, or be a company director who owns less than 25% of its shares (unless you’re starting a business in Spain and have a start-up or entrepreneur visa).
3. The work you’ll be doing in Spain will be your main job.

Question
Liam, I’ve been looking at my credit card statement and I’ve only noticed now that the interest rate I’m being charged is 22.90%. Stupid I know that I’ve only noticed it now but I can see that other providers are offering 0% on balance transfers for up to six, seven or even 12 months and I’m wondering if I transferred to say the 0% offering for 12 months and I was accepted, would I save much money? I owe about €2,500.Thanks.

Answer
The saving you will achieve if you switch to the lower rate over 12 months is €573.05.
And let me show you how I arrived at this amount.
22.90% (Interest Rate)/365 (number of days in year) = 0.0627% (daily rate charged)
When you multiply the amount owing by the daily interest rate, it amounts to €1.57 i.e. €2,500 x 0.0627%.
And when you multiply the daily interest rate charge by the amount of days in a typical year, you get €573.05.
I hope that answers your question and regardless of whether the saving is significant or not, and I think it is, moving to a provider with a lower rate is always the right thing to do in the short and long term, and the quicker you get that balance down to zero the better
And moving to a 0% provider and not using the card again, will help get you there quicker.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at liam@harmonics.ie

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How the Beckham Law can benefit if relocating for work from Limerick to Spain

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