On a €140,000 salary in Palma, the Beckham Law cuts Spanish income tax to €33,600 a year, a saving of roughly €16,200 against standard residency in 2026. Add a €750,000 investment portfolio and a let house in Manchester, and the gap grows to about €27,200, because the regime leaves foreign income out of Spanish tax altogether.
This worked example compares Beckham Law vs Spanish tax residency for one person, step by step, with every figure shown. For how the regime works in general, see our guide to the Beckham Law: what you save, who qualifies and how to apply.
The headline rates tell only part of the story. Your regime also decides what Spain taxes, what you report each year, how a property sale is taxed, and what changes when the regime ends after six years.
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The example: a move from Manchester to Palma
Daniel, a senior engineering manager, moves from Manchester to Palma de Mallorca in January 2026 for an in-house role paying €140,000 a year. He has been tax resident outside Spain for the previous five years and is moving for a Spanish job, so he meets the Beckham Law eligibility rules and files Modelo 149 within six months of starting work (AEAT). For the visa and eligibility points specific to UK citizens, see our guide to the Beckham Law for UK citizens.
He also has:
- A global investment portfolio worth €750,000, paying about €18,750 a year in dividends (a 2.5% yield).
- A house in Manchester worth €400,000, let out while he waits to sell it, earning about €16,000 a year after costs.
- Plans to buy an apartment in Palma before the Manchester house sells.
Our assumptions: tax year 2026, single, no children, salary paid in 12 instalments, UK income tax of about €300 on the rent after his UK personal allowance, and dividends paid gross, with no foreign tax withheld.
Beckham Law vs Spanish tax residency: the salary alone
Salary is the biggest single figure in the comparison, so we start there. Here’s the same €140,000 run through both regimes, step by step.
Under standard residency
Standard Spanish residents pay tax on a progressive scale, made up of a state half and a regional half. In the Balearic Islands, the combined rate runs from 18.5% to 49.25% (Article 63 of the income tax law; Article 1 of the Balearic tax code, Decreto Legislativo 1/2014, as amended by Balearic Law 12/2023). Here’s the calculation:
- Salary: €140,000.
- Less employee Social Security: about €4,158. That’s 6.5% on the 2026 maximum contribution base of €5,101.20 a month (€3,979 a year), plus €179 as the employee’s share of the solidarity contribution on pay above that base, at 0.19%, 0.21% and 0.24% across its three bands (Orden PJC/297/2026, BOE).
- Less the €2,000 employment expense allowance (Article 19 of the income tax law): taxable base of €133,842.
- State scale: €25,038, after the €5,550 personal allowance (Article 57 of the income tax law).
- Balearic scale: €24,803, after the same allowance.
- Total: €49,841, an effective rate of 35.6% of salary.
Under the Beckham Law
Employment income is taxed at a flat 24% up to €600,000, with no deductions (Article 93 of the income tax law).
- €140,000 × 24% = €33,600.
The difference
On salary alone, Daniel saves €16,241 in 2026. The Social Security contributions are the same under both regimes, since the Beckham Law is a tax regime and Social Security sits outside it.
Where the gap widens: foreign income
Salary is half the picture. For anyone moving with assets, foreign income is where the two regimes really part ways.
Under standard residency, Spain taxes your worldwide income:
- UK rent: the €16,000 joins Daniel’s salary in the general base and is taxed at his top marginal rate. That adds €7,400 of Spanish tax, less a credit of about €300 for the UK tax already paid on it, under the UK-Spain tax treaty.
- Dividends: the €18,750 is taxed on the savings scale: 19% on the first €6,000 and 21% on the rest, or €3,818 (Articles 66 and 76 of the income tax law). Where tax is withheld abroad, such as 15% on US shares, Spain gives a credit for it.
Under the Beckham Law, Spain taxes only Spanish-source income. The UK rent and the dividends sit entirely outside Spanish tax.
Spanish tax in 2026
Item | Standard residency | Beckham Law | Difference |
Salary (€140,000) | €49,841 | €33,600 | €16,241 |
UK rent (€16,000), after UK credit | €7,100 | €0 | €7,100 |
Dividends (€18,750) | €3,818 | €0 | €3,818 |
Total Spanish income tax | €60,759 | €33,600 | €27,159 |
The UK still collects its €300 on the rent under both regimes, so the overall saving quoted at the top holds.
Wealth tax and Modelo 720
The two regimes also differ on what you own, as well as what you earn. For Daniel, one of these differences changes what he files and the other leaves his bill the same.
Wealth tax: zero in the Balearics under both regimes
Under standard residency, Spanish wealth tax applies to worldwide assets. Under the Beckham Law, it applies only to assets located in Spain. Our guide to wealth tax in Spain covers the regional allowances, and our article on what happens to your wealth tax under the Beckham Law covers the Beckham side in detail.
For Daniel, the result is the same either way: a wealth tax bill of zero. The Balearic Islands raised the exempt amount from €700,000 to €3 million from 2024 (AEAT; Balearic Law 12/2023), plus up to €300,000 for a main home (Article 4 of the wealth tax law). His €1.15 million of foreign assets sits well below that.
The difference does matter in regions with lower thresholds (AEAT):
- Catalonia: €500,000 exempt, so the same €1.15 million of foreign assets would be taxable under standard residency.
- State default: €700,000, used where a region sets no amount of its own.
- Madrid and Andalusia: €700,000, with a 100% relief that removes the tax below €3 million (AEAT).
- Above €3 million, the state’s solidarity tax on large fortunes applies in every region (Article 3 of Law 38/2022).
Modelo 720: required under standard residency only
Standard residents must declare foreign assets on Modelo 720 between 1 January and 31 March each year when any of three categories passes €50,000: bank accounts, securities, and property (AEAT). Daniel’s portfolio and Manchester house both pass that threshold, so he would file for both.
Beckham Law taxpayers are exempt, as the AEAT confirms in its Modelo 720 FAQs, because they are taxed only on Spanish-source income. Our guide to Modelo 720 in Spain explains who files it and when, and our article on the Beckham Law and Modelo 720 covers the exemption itself.
Selling the Manchester house: timing matters
The sale of the UK house shows how the regimes differ. Say Daniel bought the Manchester house for €280,000 and sells it for €400,000, a gain of €120,000.
Beckham Law, any of the six years: the gain falls outside Spanish tax, because it comes from a UK asset. Only UK capital gains tax applies.
Standard residency, with reinvestment: the main home exemption can remove the Spanish tax. Spain exempts the gain on a main home when the full sale proceeds go into a new main home (Article 38 of the income tax law). The exemption covers a home in any country, as the DGT has confirmed in binding rulings. A let home still counts if it was the owner’s main home at any time in the two years before the sale (Article 41 bis of the income tax regulation), so Daniel, who left in January 2026, needs to sell by about January 2028. The conditions are:
- The Manchester house must have been his main home, which means three continuous years of living there. We assume Daniel meets this.
- He reinvests the full sale price in the Palma apartment. He can buy the apartment up to two years before the sale or up to two years after it (Article 41 of the regulation). If a mortgage on the Manchester house is still outstanding, the amount to reinvest is the sale price minus that balance.
- He moves into the apartment within 12 months of buying it (Article 41 bis of the regulation), so that it becomes his main home.
If he reinvests only part of the price, only the matching share of the gain is exempt. Reinvesting €300,000 of the €400,000, for example, leaves 25% of the gain taxable: €30,000, which costs €6,180 on the savings scale.
If the reinvestment is still pending at the end of the year of sale, he states in that year’s return that he intends to reinvest.
When he meets these conditions, the Spanish bill is zero under standard residency as well, so the two regimes tie on this sale.
Standard residency, sold after January 2028 or without reinvestment: the gain is taxable on the savings scale: €1,140 on the first €6,000, €9,240 on the next €44,000 and €16,100 on the remaining €70,000, a total of €26,480.
UK private residence relief covers the years he lived in the house and the final nine months of ownership, so UK tax applies only to the rest of the gain, and the credit against the €26,480 shrinks to match, with Spain collecting the difference.
Buying in Palma before the UK sale
Buying in Palma before the Manchester sale completes creates a cash-flow gap under either regime. A bridging loan in Spain is the usual way to cover it, secured against the property you’re selling and repaid when the sale completes. For the longer-term loan on the apartment, see our guide to resident mortgages, and for the tax side of the purchase, our article on buying property in Spain while on the Beckham Law.
The regime affects the mortgage indirectly. Lenders assess affordability on net income, and Daniel’s net pay is about €1,350 a month higher under the Beckham Law, which can raise the amount a lender will offer.
Once he’s living in the apartment, one open question applies to Beckham holders only: whether Spain can charge deemed rental income on their main home (Article 85 of the income tax law). The TEAC, the central tax tribunal, says yes (resolution 00/03697/2025, 17 July 2025), and that ruling binds the Tax Agency. The Madrid High Court has ruled the other way, most recently in judgment 665/2025 of 17 September 2025 (CENDOJ, ECLI:ES:TSJM:2025:10842). The European Commission also considers the charge a breach of EU law and sent Spain a reasoned opinion in April 2026 (European Commission). We cover each ruling in our Beckham Law guide for US citizens. At 24% on 1.1% or 2% of the cadastral value, the charge is a few hundred euros a year for most homes.
Side income: the freelance trap
If Daniel took on freelance consulting while in Palma, the effect would be bigger than an extra tax bill. The Beckham Law covers employment income, and income earned through a permanent establishment in Spain ends the regime (AEAT). Regular self-employed work carried out from Spain can count as one, which puts the whole regime at risk, salary included. The exception is an entrepreneurial activity that ENISA certifies as innovative, which the 2023 Startup Law brought into the regime (Law 28/2022).
Before taking on side work, get advice on whether it fits the regime. Work that falls outside it needs autónomo registration and can cost the regime from that year. Our article on the Beckham Law for remote workers covers which kinds of work fit.
What happens after year six
The Beckham Law covers the year you become resident plus the next five tax years. Daniel arrived in 2026, so his last Beckham year is 2031. From 2032:
- His salary moves to the progressive scale. On the same €140,000, his tax rises from €33,600 to about €49,800 a year at 2026 rates.
- Foreign income, including any dividends and rent, becomes taxable in Spain.
- Modelo 720 applies, and wealth tax covers worldwide assets.
- Any gain on foreign assets sold from 2032 is taxed in Spain.
Planning steps for the last Beckham years:
- Sell foreign assets you intend to sell anyway before the regime ends, so the gain stays outside Spanish tax.
- Take the value of your foreign accounts and investments at 31 December 2032, add the average balance of each bank account over the last quarter, and note the purchase price of any foreign property, so your first Modelo 720 is ready by 31 March 2033.
- Check whether your foreign assets will pass your region’s wealth tax threshold.
- Review where your portfolio is held, since dividends become taxable in Spain at 19% to 30%.
Our article on what happens when the Beckham Law ends sets out the full transition plan.
The other differences, side by side
The table brings together the differences beyond income tax for Daniel’s case.
Item | Standard residency | Beckham Law |
Wealth tax (Balearics) | €0 (worldwide assets, €3m exempt) | €0 (Spain-located assets only) |
Modelo 720 | Required (portfolio and UK property) | Exempt |
Spanish tax on €120,000 UK property gain | €0 if fully reinvested in a Palma main home and sold by about January 2028; otherwise €26,480, less UK tax credit | €0 |
How long it lasts | Ongoing | 2026 to 2031 (six tax years) |
Which regime suits you?
The Beckham Law is usually worth it if:
- Your salary is above about €58,000, where the average standard rate in the Balearics passes 24%. Our article on whether the Beckham Law is worth it on a salary under €100k runs the lower salaries.
- You hold foreign investments or property that produce income.
- You may sell foreign assets in the next six years.
- You live in a region with a low wealth tax threshold, such as Catalonia, and hold foreign assets above it.
Standard residency can be the simpler choice if:
- Your salary is below about €58,000 and you earn only Spanish income.
- You plan to freelance in Spain alongside your job.
Standard residency also applies automatically once the six-month Modelo 149 window after starting work has passed, so file early if you want the choice.
Want this modelled for you?
Moving with savings, investments or a property abroad? We’ll model your salary, assets and timeline under both regimes before you commit.
FAQs: Beckham Law vs Spanish tax residency
Short answers to the main questions about choosing between the two regimes.
How much does the Beckham Law save compared with standard Spanish tax residency?
On a €140,000 salary in the Balearic Islands, about €16,200 a year in 2026. With €16,000 of foreign rent and €18,750 of foreign dividends, the saving rises to about €27,200, since the Beckham Law leaves foreign income out of Spanish tax.
Is the Beckham Law always better than standard Spanish tax residency?
It usually is for salaries above about €58,000 in the Balearics, because the flat 24% sits below the average standard rate. Below that, standard residency can cost less. Side self-employed work in Spain can also put the regime at risk.
Does the Beckham Law affect tax on investment income?
Yes. Foreign dividends, interest, rent and gains are outside Spanish tax under the Beckham Law. Under standard residency, they are taxed in Spain, at 19% to 30% for savings income and at your marginal rate for rent.
Do I pay wealth tax under the Beckham Law?
You pay it on assets located in Spain, such as a Spanish home or Spanish bank accounts. Whether anything is due depends on your region’s exempt amount: €3 million in the Balearic Islands, €700,000 by default and €500,000 in Catalonia.
Do I need to file Modelo 720 under the Beckham Law?
The AEAT confirms that Beckham Law taxpayers are exempt from Modelo 720, because they are taxed only on Spanish-source income. Once the regime ends, you file it for any category of foreign assets above €50,000.
What happens to the worked example numbers after six years?
From year seven, standard residency applies in full. Daniel’s tax on the same salary rises to about €49,800, foreign income becomes taxable in Spain, and Modelo 720 and worldwide wealth tax apply. Selling foreign assets before then keeps those gains out of Spanish tax. By 2032 the Manchester house has lost its main home status, so a sale from 2032 is taxed at €26,480, less any UK tax credit.
This article gives general information only. The figures are a worked example based on 2026 rates, and individual circumstances vary significantly. Always consult a qualified adviser for advice specific to your situation.
