Maintaining the Beckham Law special tax regime after a period of unemployment

The application of the special regime for displaced workers, commonly known as the Beckham Law, raises questions when the employment relationship that motivated the choice of this tax treatment is terminated. Recently, the General Directorate of Taxes (DGT) has issued a relevant ruling regarding the continuity of this regime in situations of labor inactivity.

What the DGT has ruled

The query focused on determining whether a taxpayer could continue applying the special regime provided for in Article 93 of the Personal Income Tax Law (LIRPF) after finding new employment with a different company following a period of unemployment. The DGT has ruled that the termination of the employment relationship does not entail automatic exclusion from the special regime, provided that the unemployment is transitory in nature and occurs due to causes beyond the taxpayer's control.

The ruling establishes that the objective of this regime is to attract individuals to Spain. Therefore, it is compatible for the taxpayer to remain in a state of inactivity for a brief period and subsequently start a new employment relationship that meets the requirements demanded by current regulations. Exclusion from the regime will only occur if one of the determining conditions governing this tax treatment is breached.

What it means for you

If you are a displaced worker who has opted for this regime and you lose your job, you should not assume that you will automatically lose your special tax status. This ruling provides legal certainty in situations of labor transition, allowing temporary inactivity not to break the continuity of the regime, provided that the requirements of Article 93 of the LIRPF are met when starting the new professional activity.

What you should do

In the event of a change in employment status, it is fundamental to analyze the following points:

• Verify that the cause of the contract termination is beyond the worker's control to fit within the concept of transitory unemployment.
• Check that the new employment contract strictly complies with the requirements of Article 93 of the LIRPF.
• Evaluate the particular situation of each case to ensure that the conditions maintaining the validity of the special regime have not been violated.