He Moved to High-tax Spain but Saved BIG on Taxes

“When we left Peru in July 2020, the [Lima] airport was shut down. We had to get a special flight – one of only three per week that was repatriating Peruvian citizens from Europe, and, on the other leg, repatriating European citizens from Peru.

“We left from a military airport, which was not prepared to handle civilians. There were no luggage loading facilities. Nowhere to stamp passports. We were limited to one carry-on and one suitcase per person. It was a mess.”

Luigi is an accomplished business executive and Peruvian citizen. In 2020, he was planning a move to Spain, but not for another three or four years.

But when COVID hit, and Peru went into a draconian lockdown, Luigi’s moving timeline changed from “a few years from now” to “right now.”

Luckily, Luigi’s wife and their children are citizens of a European Union country. This allowed Luigi to fast track temporary residency in Spain in just a matter of weeks. For someone with no ties to the European Union, it generally takes closer to nine months.

Temporary residency allowed Luigi the time required to apply for permission to work in Spain, and to move up to permanent residency by submitting proof of income and health insurance.

Luigi’s family settled in Marbella on the southern coast of Spain, which according to Luigi, ended up being “the best place in Europe, hands down,” when it came to relaxed COVID restrictions.

But Luigi had another major problem to solve: tax residents of Spain owe up to 47% of their worldwide income to the Spanish government. And on top of that, you could be on the hook for a wealth tax of up to 3.75% on your worldwide assets… No bueno.

BUT, for people who have relocated to Spain for an employment contract, there is a way out. And lucky for Luigi, a business associate had recently started a company in Spain.

As a skilled experienced businessman, he was able to land a consulting position, and fulfill the work requirement to take advantage of the “Beckham Law”.

This law was named after superstar footballer David Beckham because he was the first to take advantage of it in 2005 after landing a €37 million contract with Real Madrid.

For up to six years, the Beckham Law allows a new resident employed by a Spanish company to owe no tax on their worldwide income and not be subject to Spain’s wealth tax over the same period. 

Plus, during that time, Spanish-based annual income of up to €600,000 is taxed at a 24% rate. Annual income over €600,000 still faces a 47% tax rate.

Now, even with the increased cost of living in Marbella compared to Lima, Luigi still nets more savings, because of the Beckham tax law.

But that’s just one small aspect of the benefit to Luigi and his family.

He reports that Marbella is very safe– he allows his teenage daughter to Uber around town on her own. He also likes the international community which has settled the area.

And Luigi told us that except for a 2-week period in February 2021, Marbella’s economy remained open. Nothing was shut down.

No place will ever be perfect. But with a solid Plan B and a little bit of leg work, you have the power to increase your quality of life, and even save money doing it.

Last week, premium Sovereign Man: Confidential members received a Case Study featuring Luigi’s journey from South America to free southern Spain in 2020. In it, we also covered Spain’s generous Beckham Law in more depth.

Luigi also shared a couple of the down-sides of Marbella, and one tip to know before moving to Spain.

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Simon Black is an international investor, entrepreneur and permanent traveler. His daily letter is both educational and entertaining, and we suggest that those who want unbiased, actionable information about global opportunities sign up for Sovereign Man’s free, actionable newsletter at http://www.SovereignMan.com.

From Simon Black of SovereignMan.com