When a foreign company considers relocating an employee to Spain, the question that matters most is rarely "how much will the employee save?". The commercially relevant questions are: which structure carries the least legal risk for the company, what does it actually cost the group, and does the employee qualify for the Beckham Law?
Spain’s special regime for inbound workers — Article 93 of the LIRPF, universally known as the Beckham Law — allows qualifying employees who become Spanish tax residents to be taxed at a flat 24% rate on their employment income up to €600,000, rather than under the standard progressive scale that reaches 47% or above. The regime applies for the year of arrival plus five following years — six tax years in total. Its attraction for the individual is well documented. What this article analyses is the employer’s perspective: the five available structures, their legal and tax implications for the company, and the social security cost angle that is consistently underestimated.
Why structure matters more than the rate
The 24% rate is identical regardless of how the relocation is organised. What varies is who bears the social security obligations, whether the foreign company acquires a permanent establishment in Spain, and what compliance burden falls on the group. A poor structural choice can invalidate access to the regime, create an unwanted Spanish tax footprint for the foreign company, or layer in structural costs that erase the employee’s tax benefit.
The five structures: analysis for the employer
Route A — Direct remote employee of the foreign company
The employee retains their employment contract with the foreign company and works from Spain as an international teleworker. Article 93.2 LIRPF, as amended by Ley 28/2022 (the Startups Act), expressly recognises this route. No Spanish company is incorporated.
For the employee: The cleanest and most straightforward route. The employee keeps their contract, their employment protections, and accesses the Beckham regime with legal certainty. The election (Modelo 149) must be filed within six months of registering with the Spanish social security system.
For the employer: The principal obligation is to register the employment relationship with the Spanish social security authority (TGSS). EU Regulation 883/2004 is unambiguous: social security contributions follow the place where the work is physically performed. Once the employee works habitually from Spain, contributions must be paid in Spain. The foreign employer has two operational options — register directly with the TGSS as a non-established employer, or outsource the obligation to a Spanish Employer of Record (EOR).
One issue the employer must assess carefully: if the employee’s role involves signing contracts on behalf of the company or exercising an active commercial mandate in Spain, that activity could create a permanent establishment of the foreign company in Spain for Spanish non-resident income tax purposes. Internal, technical or support roles do not raise this issue; client-facing or commercially active roles require a prior legal and tax review of the employee’s specific functions.
Route B — The employee’s own Spanish company
The employee incorporates a Spanish SL of which they are director and sole shareholder. The SL signs a B2B services contract with the foreign company and invoices its fees. The employee draws remuneration from the SL. The applicable Beckham route is the director route (Art. 93.2.b LIRPF), which since Ley 28/2022 requires no ENISA certification, provided the entity is not a purely holding company (entidad patrimonial). For a certified start-up (empresa emergente), any shareholding percentage is accepted without further qualification. For an ordinary operating company, a stake that places the director within the related-party definition of art. 18 LIS — broadly, 25% or more — is a complication; since Route B typically involves close to 100% ownership, this threshold is invariably crossed and requires careful documentation and, where there is doubt, a binding tax ruling.
For the foreign employer: This is the structure of least burden for the company. There is no entity to incorporate, no Spanish social security registration, no local payroll to manage. The company pays invoices to a Spanish SL.
The risk that cannot be overlooked: The anti-abuse risk in this structure derives principally from two sources. First, the simulación doctrine under Article 16 of the General Tax Act (LGT): if the AEAT concludes that the SL has no genuine economic substance beyond channelling the shareholder’s own activity to a single counterparty, it may disregard the company and reclassify the income directly in the hands of the individual. Second, DGT doctrine on permanent establishment — reflected in rulings such as V2248-24, which concerned an employee-to-autónomo conversion involving a single former-employer client — indicates that where a Spanish company’s income is traceable to an arrangement that replicates an employment relationship with a single foreign counterpart, the income may be treated as derived through a permanent establishment, which would exclude the Beckham regime. The ruling does not directly govern the own-SL scenario, but the underlying reasoning is analogous and the AEAT applies it by extrapolation. Together these risks mean that an interposed company structure with a sole client who is the former employer is high-risk unless it has genuine multi-client substance.
This route is viable only if a binding tax ruling (consulta vinculante) is obtained from the AEAT beforehand, confirming the specific structure. Without that formal confirmation, the risk of retrospective challenge is real.
Route C — The employer’s Spanish subsidiary
The foreign company incorporates a Spanish SL — a legally separate subsidiary — and the employee joins it as employee or director. The subsidiary is an independent Spanish legal entity; it is not a permanent establishment of the parent.
For the employee: Access to the Beckham regime is clean and certain, either via the employment contract route (if employed by the subsidiary) or the director route. Full employment protections. Flat 24% rate.
For the employer: This is the most demanding route in terms of corporate commitment. The employer takes on the incorporation of a Spanish entity, its ongoing accounting and tax compliance, the management of a local payroll, and — because the subsidiary and the parent are related parties — the obligation to document the transfer pricing applied to the intercompany services arrangement. This is a genuine, lasting corporate presence with the structural costs that come with it. It makes full commercial sense when the employer wants or needs a Spanish operational base independently of the employee’s relocation.
One critical point that is frequently missed: the Spanish entity must always be a subsidiary (SL), never a branch. A branch of a foreign company is legally a permanent establishment of the parent in Spain, and this excludes the Beckham regime for any employee working through it.
Route D — ZEC company in the Canary Islands
The ZEC (Zona Especial Canaria) is an incentive regime in the Canary Islands offering a 4% corporate income tax rate for registered entities, compared to the standard 25% rate. The employer incorporates a Spanish company in the Canaries and registers it in the ZEC. The employee joins as employee or director.
For the employee: The personal outcome is identical to Routes A and C — Beckham at 24%. The 4% rate is a corporate benefit, not a personal one, and registering in the Canaries does not change the employee’s income tax rate.
For the employer: The ZEC is by far the most demanding structure. The ZEC rules require the employer to maintain a minimum of 5 employees physically based on the capital islands (Tenerife and Gran Canaria), or 3 on the smaller islands (genuine Canarian jobs, not remote staff elsewhere), a minimum investment in fixed assets of €100,000 on the capital islands (€50,000 on the smaller islands) within the first two years — an amount that may be reduced or waived for entities in designated innovative or priority sectors — a registered office and effective management in the islands, and registration before 31 December 2026. These requirements add very significant structural costs. The 4% corporate tax benefit only generates value if the company books real profit in the Canaries; a structure built around one relocated employee will generate little or no corporate profit and, therefore, little or no benefit from the reduced rate.
Route D only makes sense if the employer has an independent business purpose for building genuine operations in the Canary Islands.
Route E — Self-employed (autónomo)
The employee registers as self-employed in Spain and invoices the foreign company directly. This is the only one of the five routes that does not give access to the Beckham regime in ordinary circumstances.
Ley 28/2022 created two narrow exceptions to the general rule that self-employment is excluded from the Beckham regime: an entrepreneurial activity certified as innovative by ENISA, and the provision of services as a highly qualified professional to certified Spanish start-ups. Conventional freelance work for a single foreign client — the former employer — fits neither exception.
The outcome for the employee is taxation under the standard IRPF progressive scale, reaching 47% or above, plus the self-employed social security contribution (RETA). The gap relative to the Beckham routes is substantial for mid-to-high earners. This route should be considered only as a last resort when the Beckham regime is unavailable.
The employer cost advantage that is rarely mentioned first
Every employer’s instinctive concern about an international relocation is that it will cost more. In the case of Spain, that assumption deserves to be tested.
Spain sets a statutory cap on the employer’s maximum social security contribution base, which limits standard employer charges. Many European countries — including several of the most common home countries for internationally mobile employees — either have no such cap or set it at much higher levels, meaning employer social charges on high salaries are materially greater. It is important to note, however, that since 1 January 2025 a solidarity contribution (cuota de solidaridad) applies in Spain to the portion of salary above the maximum contribution base — a small incremental employer rate that increases gradually over the coming years. For high earners, the effective employer cost in Spain is therefore no longer subject to an absolute ceiling; the advantage over uncapped countries is real but narrower, and must be measured on the specific salary figures.
For an employee with a significant gross salary, the all-in employer cost in Spain will in many cases still be lower than what the employer currently pays at home. The premise that relocating to Spain will necessarily increase employer costs is often incorrect; in a substantial number of cases the relationship is the inverse. But this assessment must be done with the actual numbers — the employee’s gross salary, their home-country social security regime, and the applicable Spanish contribution bases — to produce a reliable comparison.
The permanent establishment question: the most critical angle for the employer
The permanent establishment question is the most legally sensitive point for the foreign company. An employee working from Spain may create a PE of the foreign company there if:
- They habitually conclude contracts on behalf of the company from Spain (the dependent agent test).
- A fixed place of business in Spain (an office, etc.) is at the disposal of the foreign company.
The existence of a PE means that profits attributable to the Spanish activity become subject to Spanish non-resident income tax. And — crucially — the employee’s income earned through that PE is excluded from the Beckham regime.
For the large majority of knowledge workers in internal roles — engineering, product, finance, analysis — the PE risk is low. For functions with outward commercial orientation toward the Spanish market, the analysis must be conducted case by case before the relocation is formalised.
The year-six cliff
The Beckham regime has an expiry date: the year of arrival plus five years. In year seven, the employee moves to the standard IRPF regime, becoming taxable on worldwide income at progressive rates. Foreign-source income that was outside the scope of Spanish taxation during the Beckham period — dividends, interest, gains on foreign assets — becomes fully includible from that point.
This regime change should be anticipated from year four or five of the Beckham period, both from the employee’s perspective (portfolio reorganisation, wealth planning) and from the employer’s (review of the remuneration structure and the corporate arrangement in place).
How BMC can help
A recurring error in employer-driven relocations is sequencing the social security registration and the Beckham application independently. The Modelo 149 window opens on the date of TGSS registration — delay one and you shorten the other. BMC co-ordinates both processes simultaneously, so the employer’s social security obligation and the employee’s regime election are aligned from day one.
Beyond the initial filing, we advise on the structural choice — subsidiary, direct remote employee or EOR — and, where Route B is under consideration, on whether the specific arrangement merits a binding ruling request before any entity is incorporated. We also prepare the annual Modelo 151 returns throughout the regime and open the transition conversation from year four, well before the year-six cliff creates urgency.
If your company is considering relocating one or more employees to Spain, see our Beckham Law and inpatriate tax service or contact our team directly for an initial structural assessment.
