If you arrived in Spain in 2018 or 2019 under the Beckham Law regime, year 7 is now in sight — or already here. The regime's six-year clock has been running since your first year of Spanish tax residency, and when it stops, a fundamentally different tax reality begins. The standard IRPF regime brings higher marginal rates, worldwide taxation, new reporting obligations, and a wealth tax exposure that did not exist during the Beckham years. For most impatriate taxpayers, year 7 is the highest-risk tax event since their original application.
This guide explains exactly what changes in year 7, why Modelo 720 and Modelo 721 obligations begin post-exit, how the wealth tax scope shifts, what to do about foreign capital gains, and why the planning horizon should start no later than 18 months before the regime ends.
The six-year clock: when does the Beckham regime end?
Under Article 93 of the LIRPF (as amended by Ley 28/2022, of 21 December), the special impatriate tax regime applies for the tax year in which the taxpayer acquires Spanish tax residency and the five immediately following tax years — six years in total.
The regime does not end on a specific calendar date. It ends at the close of the sixth tax year in which it has applied. For a taxpayer who acquired Spanish residency in 2019:
| Tax year | Regime status |
|---|---|
| 2019 | Year 1 — regime applies |
| 2020 | Year 2 |
| 2021 | Year 3 |
| 2022 | Year 4 |
| 2023 | Year 5 |
| 2024 | Year 6 — final year |
| 2025 | Year 7 — standard IRPF begins |
The regime does not wind down gradually. On 1 January of year 7, the taxpayer is a full Spanish tax resident subject to standard IRPF on their worldwide income. There is no partial-year Beckham treatment in year 7.
This predictability is the regime’s main planning advantage compared with early termination: the exit date is known years in advance.
The IRPF transition: from 24% flat rate to progressive scale
The most immediately visible change in year 7 is the tax rate applicable to employment income. Under the Beckham regime, salary and professional income up to €600,000 per year is taxed at a flat 24% rate. Income above €600,000 is taxed at 47%.
Under standard IRPF, the general income scale applies. The Spanish progressive scale reaches 47% at income levels starting from approximately €300,000 in most regions, and some regions (Catalonia, Valencia) apply surcharges that push the effective marginal rate above 50%.
Indicative tax differential for a €250,000 salary (before any regional variations):
- Under Beckham regime: approximately €60,000 IRPF (24% flat rate)
- Under standard IRPF (general scale, 2026): approximately €105,000–€115,000
The actual figure depends on the autonomous community of residence, deductions available, and the composition of income. But the directional impact is unambiguous: for high earners, the year-7 tax increase is substantial.
The transition year is particularly sensitive because the employer’s withholding rate must be updated to reflect standard IRPF marginal rates from 1 January of year 7. If the employer continues applying 24% Beckham-rate withholding into year 7, the taxpayer will face a significant underpayment when filing their annual IRPF return. Coordinating the withholding update with the employer’s HR and payroll departments is an essential early step.
Worldwide income: what enters the tax base for the first time
During the Beckham Law regime, the taxpayer is taxed under the non-resident income tax (IRNR) rules on an obligación real basis — meaning only Spanish-source income is within scope. Foreign income from dividends, interest, capital gains on overseas assets, and rental income from properties outside Spain is invisible to Spanish tax authorities during the regime.
Year 7 ends this protection. From 1 January of year 7, the taxpayer is an ordinary IRPF resident and their worldwide income is within the Spanish tax base.
The categories of income most commonly affected:
Foreign investment portfolios. Dividends, interest, and capital gains from foreign securities, funds, and ETFs all become taxable in Spain under the IRPF savings tax scale (19%–28%). Any dividends received during year 7 are taxable regardless of when they were declared by the distributing company.
Rental income from foreign property. Rental income from real estate located outside Spain was not taxable in Spain during the regime. From year 7 it is subject to IRPF as general income, integrated with employment income for progressive tax purposes.
Foreign pensions and occupational income. If the taxpayer receives pension income from a foreign occupational scheme or a foreign social security system, this income becomes taxable in Spain from year 7. The applicable tax treaty (CDI) between Spain and the pension source country determines whether Spain has exclusive or shared taxing rights.
Income from foreign companies. Dividends from foreign companies or income from foreign partnerships in which the taxpayer holds an interest become Spanish-taxable. If the entity is in a low-tax jurisdiction and meets controlled foreign corporation (CFC) criteria under Spanish tax law, attribution rules may apply.
Modelo 720 and Modelo 721: obligations that begin post-exit
This is the planning dimension most frequently overlooked by taxpayers in years 4–6 of the Beckham regime.
During the Beckham regime, neither Modelo 720 nor Modelo 721 applies. The reason is structural: these information returns are obligations of Spanish IRPF residents, and Beckham taxpayers are classified as non-residents (obligación real) for tax purposes during the regime. There is no obligation to declare overseas assets or foreign crypto holdings while the regime is in force.
Modelo 720 begins with ordinary IRPF residency.
Modelo 720 is the information return for overseas assets held by Spanish tax residents. The obligation arises when the aggregate value of foreign assets in any of three asset categories — bank accounts abroad, securities and financial rights at foreign institutions, and real estate outside Spain — exceeds €50,000.
The first Modelo 720 covers the first calendar year of ordinary IRPF residency. It is filed the following April (the standard submission window is 1 January to 31 March of the year following the declaration year, though AEAT practice and deadlines should be verified for the relevant year).
For a taxpayer who exits the Beckham regime at the end of 2024 and becomes an ordinary resident from 2025, the first Modelo 720 would cover assets held at 31 December 2025, submitted in the spring of 2026 — assuming the thresholds are met.
Modelo 721 begins at the same point.
Modelo 721 is the equivalent obligation for virtual currencies held at foreign service providers (exchanges, custodians, and similar platforms). Introduced by Ley 11/2021, it applies when the total value of foreign-held crypto-assets exceeds €50,000 at 31 December of the declaration year. It does not apply during the Beckham regime for the same reason as Modelo 720.
The first Modelo 721 for a post-Beckham ordinary resident covers the first year of ordinary residency and is filed in the January–March window of the following year.
Practical planning note: taxpayers who exit the Beckham regime and hold substantial overseas assets or crypto should undertake a full inventory of foreign holdings in the final year of the regime. This inventory serves two purposes: it establishes the baseline for the first Modelo 720/721 declarations, and it identifies which assets carry unrealised capital gains that may benefit from pre-exit crystallisation (covered in the next section).
Wealth tax: the shift from Spanish-assets-only to worldwide scope
The change in wealth tax exposure at year 7 is the second major planning trigger, and one that is frequently underweighted in pre-exit analysis.
During the Beckham Law regime: The taxpayer is treated as a non-resident for wealth tax purposes under Article 5 of Law 19/1991 (Ley del Impuesto sobre el Patrimonio). Non-residents are subject to Spanish wealth tax only on assets located in Spain. Foreign bank accounts, overseas securities, foreign real estate, and interests in non-Spanish entities are outside the Spanish wealth tax base.
From year 7 onwards: The taxpayer is an ordinary Spanish tax resident and is subject to wealth tax on worldwide net assets if they exceed the applicable minimum exemption (€700,000 net exemption at the state level, plus the primary residence exemption of up to €300,000, subject to regional variations).
The wealth tax rate scale in Spain ranges from approximately 0.2% to 3.5% at the national level, though autonomous communities can modify rates and exemptions. Madrid applies a 100% bonification (effective rate of 0%), which means that taxpayers who establish and maintain their fiscal residence in Madrid from year 7 onward can eliminate Spanish wealth tax on their worldwide assets.
For taxpayers with significant foreign portfolios — equity holdings, investment funds, overseas real estate — the shift to worldwide wealth tax scope in year 7 can represent a meaningful recurring annual cost. Establishing residency in an autonomous community with favourable wealth tax treatment (or evaluating whether relocation outside Spain is preferable) is a core decision in the exit-planning analysis.
Capital gains crystallisation timing
Under the Beckham regime, capital gains on the sale of foreign assets fall outside the Spanish tax base. This creates a structural planning opportunity in the final 12–18 months of the regime.
Assets that have appreciated significantly during the Beckham years — foreign equity holdings, investment funds, real estate outside Spain — can be sold within the regime period without triggering Spanish capital gains tax. The same sale executed in year 7 or later will produce gains taxed at IRPF savings rates (19%–28%).
Planning dimensions to consider:
Crystallise gains before exit. If an asset with substantial unrealised gain can be sold, reorganised, or partially disposed of within the regime period, the gain escapes Spanish IRPF taxation entirely (subject only to applicable withholding in the source country and any home-country obligations). The proceeds can then be reinvested in new positions with a clean cost basis as an IRPF resident.
Hold positions with anticipated losses into year 7. Conversely, assets with unrealised losses that are expected to recover over the medium term are better held into the IRPF period, where those losses can be offset against capital gains and generate a tax benefit under IRPF rules.
Equity awards and vesting schedules. Stock options, RSUs, and phantom shares that have vesting dates straddling the regime boundary require specific analysis. Under the proportional time-allocation rule, the income attributable to the vesting period within the Beckham regime is subject to IRNR treatment; the portion attributable to post-exit vesting is subject to IRPF. Documentation of grant dates, vesting schedules, and exercise prices is essential.
Exit tax (impuesto de salida). If the taxpayer’s exit strategy involves establishing tax residency outside Spain (rather than continuing as an ordinary IRPF resident), Article 95 bis LIRPF may apply to unrealised gains on qualifying shareholdings — but only where the taxpayer has been Spanish tax resident for at least ten of the previous fifteen tax periods, AND holds qualifying participations above the statutory value thresholds. Critically, Article 95 bis.6 LIRPF expressly excludes the years under the Beckham regime from the ten-year residency count. For most Beckham clients exiting Spain immediately at year seven, this means Article 95 bis is not triggered on residency-duration grounds. The provision becomes relevant only if the individual continues as an ordinary IRPF resident long enough to satisfy the ten-year condition. Individual analysis is required in every case.
The 18-month planning horizon
Effective exit planning cannot be compressed into the final weeks of year 6. Most of the meaningful planning measures require decisions and structural changes that take months to implement, and some depend on events that occur during the tax year (income composition, option exercises, asset disposals).
The recommended planning timeline:
18 months before exit (start of year 5):
- Conduct a full audit of overseas asset holdings — values, cost bases, unrealised gains/losses
- Identify assets with unrealised gains that could benefit from pre-exit crystallisation
- Preliminary assessment of post-exit residency options (stay in Spain as IRPF resident, change autonomous community, relocate abroad)
- Review equity award schedules and identify vesting events that fall in year 6 vs year 7
12 months before exit (start of year 6 / final regime year):
- Implement remuneration timing decisions for the final year (bring forward qualifying income or capital gains)
- Begin establishment of any investment holding structures intended to manage post-Beckham taxation of foreign investment returns
- Confirm autonomous community of residence for year 7 (relevant for marginal IRPF rates, wealth tax treatment, and regional deductions)
- Commission full Modelo 720/721 inventory for anticipated year-7 filing
6 months before exit:
- Notify employer’s payroll department of withholding rate change effective 1 January of year 7
- Finalise equity award exercise decisions
- If residency change is planned, initiate the administrative steps (registration in new country, CPE certificate for CDI purposes, AEAT communication)
- If family members are co-applicants under Art. 93.3 LIRPF, review each family member’s individual situation
Final year (year 6):
- Execute planned asset disposals before 31 December
- Confirm Modelo 720/721 baseline inventory as at 31 December (this is the reference point for the first post-exit declaration)
- File final regime IRNR return (IRPF declaration under the special regime)
- From 1 January of year 7: standard IRPF applies
Autonomous community choice for post-Beckham residency
If the taxpayer intends to remain in Spain after the regime ends, the choice of autonomous community of residence has a material impact on the post-Beckham tax bill.
The two most relevant dimensions are:
Marginal IRPF rates. The national IRPF scale applies uniformly, but each autonomous community applies its own complementary regional scale. The combined (national + regional) top marginal rate varies from approximately 43–45% in communities with lower regional surcharges (Madrid, Navarra) to 54% or higher in communities with the highest rates (Catalonia, Valencia, Extremadura). For a high earner, the autonomous community choice can represent a difference of several thousand euros per year in income tax.
Wealth tax treatment. Madrid applies a 100% bonification on wealth tax, making it the only Spanish autonomous community where wealth tax does not apply in practice. Other communities impose rates ranging from 0.2% to 3.5% on net wealth above the exemption threshold. For a taxpayer with €3–5 million in worldwide assets (including a combination of Spanish and foreign holdings), the difference between residing in Madrid and residing in a high-rate community can represent €50,000–€150,000 or more in annual wealth tax, every year from year 7 onward.
This is not a decision to leave to year 7. Spanish autonomous community residence for tax purposes is determined by where the taxpayer lives for the majority of the year, and changing it requires a genuine change of habitual residence — not a simple registration change.
How BMC manages the Beckham Law exit cycle
At BMC we advise impatriate taxpayers at every stage of the Beckham Law lifecycle, including proactive exit planning in years 4–6. Our process begins with a full asset audit and regime-end simulation — a financial model showing the post-exit tax impact across multiple scenarios — and continues through execution: income restructuring, holding structure analysis, Modelo 720/721 preparation, and coordination with tax advisers in the client’s home country where relevant.
For the full legal framework governing regime termination — including the four causes of exit and how the transition year return works — see our article on Beckham Law regime termination.
To understand the requirements and access conditions for the regime, see Beckham Law requirements 2026.
Our Beckham Law and impatriates service covers the full cycle. For the strategic dimension of post-exit planning, our tax planning service applies.
Is year 7 approaching? Contact our international tax team for a no-cost regime-end simulation and a personalised exit-planning timeline. The earlier the analysis, the more options remain available.
