UK Resident Moving to Spain – What are the tax consequences?

We often see clients who are UK residents and are interested in moving from the UK to Spain to enjoy the better weather.

When they do, they are a little anxious about the tax consequences of the move.

When one moves country there are a few key issues we always look at to decipher who has taxing rights over their income:

• Where is the individual tax resident?
• What sources of income do they have?
• When are they moving?
• Is there a double tax agreement between the countries and what does it say?
• Are there any special dispensations to encourage foreigners?

This article looks at some of these key considerations for individuals moving from the UK to Spain.

1. First Principles: When do you become Spanish-tax resident (and when do you stop being UK-tax resident)?

• Spain treats you as resident for the calendar year if you spend >183 days there, or if your centre of vital/economic interests is in Spain; sporadic absences still count towards the 183 days unless you can evidence tax residence elsewhere.
• UK residence is decided by the Statutory Residence Test (SRT). In the year you leave, you may qualify for split-year treatment, so the UK tax year splits into a UK-resident part and a non-resident part
• Tax Year Mismatch: The UK tax year runs until the 5 April each year; Spain runs to the 31 December. The arrival month matters for whether Spain taxes your whole calendar year or just from the following year.

Planning Tip – If you’ll exceed 183 days in Spain in a calendar year, you’ll be Spanish resident for that whole year. Time your arrival and days carefully to control when Spanish residency starts—and to align with UK split-year eligibility.

2. Spain’s “Beckham Law” (special regime)

This optional regime (Article 93 LIRPF) lets new Spanish residents be taxed like non-residents for up to six tax years (year of arrival + 5) with the following parameters:

• Employment Income: Flat tax of 24% up to €600,000 with higher rates on the excess (current top marginal rate applies to the slice above the threshold). Withholdings by your employer for PAYE mirrors this.
• Scope of Income: Under the regime, you’re taxed in Spain only on Spanish-source income (principally employment exercised in Spain). Investment income and gains from outside Spain are generally outside Spanish tax, while Spanish-source passive income is taxed under the non-resident rules (e.g., 19% on dividends/interest). You need to file a Modelo 151 return annually.
• Eligibility and Deadline: Typically no residence in Spain in the previous 5 tax years (post-2023 rules) and application via Modelo 149 within 6 months for Spanish Social Security registration / start of activity. Once you miss the 6-month window, you cannot opt in.

When the regime doesn’t fit: Founders/self-employed individuals who risk creating a Spanish permanent establishment or who want to use Spanish loss reliefs/allowances on worldwide income may prefer the ordinary resident regime instead of Beckham.

3. How Each Income Stream is Taxed After Your Move

A. Employment Income

• Under Beckham: 24% on Spanish-source employment up to €600k; excess at the special higher rate. Employer withholds accordingly
• Ordinary Spanish Residency (no Beckham): the progressive Spanish tax rates apply on worldwide income (rates vary by region).
• Cross-border Months: Where duties are exercised in both countries then income is apportioned. The UK–Spain DTA allocates taxing rights based on where the work is performed;

B. Self-employment / Business Income

• Beckham: Generally not intended for income attributable to a permanent establishment in Spain; such income drags you toward ordinary rules. If you’ll trade actively in Spain, we recommend modelling both regimes before choosing.
• Ordinary Residency: Taxed in Spain on worldwide profits, with foreign tax credits available under the treaty.

C. UK Property Rental Income

• The UK taxes non-residents on UK property income under the Non-Resident Landlord (NRL) scheme (gross payment possible if you register on NRL1). Spain—if you’re Spanish resident outside Beckham, or if it’s Spanish-source—also taxes it, but you typically get a foreign tax credit in Spain.

D. Dividends, Interest and Royalties

• Treaty Rates: Dividends are generally limited to 10% withholding at in the country of source (0% for certain substantial corporate holdings or pension schemes) but will be taxable at the normal tax rates in the country which the recipient is tax resident in; (15% for REIT-type property income dividends).
• Interest and royalties are generally taxable only in the residence state under the 2013 Protocol. Practically: if you’re Spanish-resident (outside Beckham), Spain taxes and the UK rate may be reduced to 0-10% via treaty claims.
• Under Beckham: Foreign-source investment income is usually outside Spanish tax; Spanish-source dividends/interest are taxed at non-resident rates (e.g., 19%).

E. Pensions

• The treaty gives Spain primary taxing rights over most private pensions/annuities received by a Spanish resident (with exceptions), and HMRC has specific notes for UK State Pension—you can seek UK PAYE exemption so only Spain taxes it (Note: Government service pensions can be different.)

F. Capital Gains

• UK still taxes non-residents on gains from UK land/real estate. For other assets, watch the UK temporary non-residence rules: if you return to the UK within a few years, certain gains realised while away can be dragged back into UK CGT.
• Treaty: Real-estate gains are taxable where the property is located; many other gains are taxed in the residence state. Spain gives foreign tax credit to avoid double tax.

4. Wealth Taxes, “Solidarity” Levy and Reporting

• Wealth tax (IP) applies to residents on worldwide assets (subject to exemptions and regional rebates) and to non-residents on Spanish assets.
• Spain also has a Temporary Solidarity Tax on Large Fortunes (ISGF) for net wealth > €3m, currently extended and collected alongside regional rules. (Exact application can vary.)
• Modelo 720 (foreign assets report): Spanish residents must report qualifying overseas assets by 31 March each year (covering the prior 31 Dec). Penalties were softened after EU scrutiny, but the obligation remains. Beckham filers often do not have to file 720 during the regime if they are taxed as non-residents for worldwide assets—but you need to confirm based on your facts.

5. Double Tax Relief in Practice (UK–Spain)

The 2013 UK–Spain Double Taxation Convention prevents double taxation through withholding caps, source-state rules for real estate, and foreign tax credits in the residence state. In practice, you either reduce UK withholding at source (treaty claims) or claim a credit in Spain.

6. Timing and Practical Checklist (move year and first Spanish filing season)

Before You Move

1. Day-count plan to manage 183-day test and UK split-year eligibility.
2. Decide whether you’ll opt into Beckham; gather employer letter, proof of prior non-residence, and get ready for Modelo 149 within 6 months of SS registration/start.
3. If you keep UK rental, file NRL1 so rent can be paid gross and you settle UK tax via Self-Assessment.
4. Review asset disposals vis-à-vis UK temporary non-residence CGT rules.

On Arrival

1. Get NIE, register with the Agencia Tributaria (Modelo 030), sort Social Security if employed.
2. If choosing Beckham, submit Modelo 149 within 6 months.
3. Track days for the 183-day test; keep evidence of UK/treaty residence if needed.

First Filing Season (for income earned in your arrival year)

• Beckham: File Modelo 151 (April–June).
• Ordinary Residency: File standard IRPF Spanish tax return; if you held overseas assets above thresholds at 31 Dec, file Modelo 720 by 31 Mar.
• UK: File a UK return for the part of the tax year you were UK-resident (if split-year applies), plus any continuing UK-source items (e.g., UK property).

7. Two Move-scenarios Compared (high level)

Scenario	You choose Beckham	You do not choose Beckham
Employment in Spain	24% up to €600k; special higher rate above; 6-year window	Progressive IRPF on worldwide employment income
Foreign Dividends / Interest / Capital Gains	Generally outside Spanish scope (but check Spanish-source items)	Taxed in Spain with treaty FTC relief
UK Rental	Still taxed in UK (NRL); Spain taxes too only if outside Beckham; otherwise taxed as non-resident on Spanish-source only	Taxed in Spain; UK also taxes—claim FTC in Spain
Reporting	Modelo 151; 149 to opt-in; 720 often not required during regime (fact-dependent)	Standard IRPF return; Modelo 720 by 31 Mar if thresholds met
Wealth / ISGF	Typically focused on Spanish-located assets while under regime	Worldwide net wealth subject to IP/ISGF (with exemptions/regional rules)

(Citations for the table content are drawn from the sources listed in sections 2–6 above.)

If you need help with your move, to model the scenarios and make the right decisions, or need any other tax assistance, please feel free to contact us at info@sailinternational.co or click here to arrange a FREE consultation.