INPATRIATES CYCLE:

CHAPTER 0: Why this cycle? «Beckham’s Law»

Although we began a cycle a few weeks ago dealing with the exemption for work carried out abroad (the famous 7p) we think we should also begin another parallel cycle in English for the special system for inpatriate workers contained in article 93 of the Income Tax Act 35/2006.

In order to achieve an overall focus on the System for Inpatriates, also known as «Beckham’s Law», we will try over the next five chapters not just to set out the contents of the System but also to analyse its more controversial areas, without overlooking the effects opting for this System may have in terms of international taxation.

It should not be forgotten that, despite the fact that the changes made for 2010 have made the System for Inpatriates much less attractive for high earners, it’s use has spread in recent years often without taking into account its possible collateral effects. Advice is often given to use the system and it is in fact often used without having consulted a tax specialist and without prior review of net worth and future income in other countries by taxpayers who under this system will pay tax as non-residents and only on income originating in Spain.

In order to make an exhaustive analysis of the system we will divide treatment of it into the following 5 sections:

Chapter 1.- General overview of the System for Inpatriates.

Chapter 2.- The response of the General Taxation Directorate to frequently asked questions.

Chapter 3.- The System for Inpatriates and the Conventions on Double Taxation. Incompatibility?

Chapter 4.- The System for Inpatriates in foreign legal systems.

Chapter 5.- UHY’s proposal for reforming the System, making it more attractive for the foreign investor.

As always all contributions or comments are welcome.

Best wishes

Jordi

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