The Beckham Law Year 7 Cliff: Tax Strategies for Long-Term Expats

Surviving the “Year 7 Cliff” in 2026

For the last six years, you have enjoyed the 24% flat tax rate and a “shield” around your global assets. However, in 2026, the first major wave of 2020 arrivals is hitting the Year 7 Cliff. This is the moment you transition from being a “Non-Resident for Tax Purposes” to a full Spanish Tax Resident. This shift is not just an increase in your salary tax; it is a fundamental change in how your entire global net worth is treated.

The Income Tax Surge: 24% vs. Progressive IRPF

The most immediate impact is on your payslip or freelance income. Under the Beckham Law, you paid a flat 24%. In Year 7, you move to the progressive IRPF scale.

In our 15 years of handling visa audits and tax planning, we have seen that for earners over €60,000, this transition results in a roughly 20% drop in net take-home pay. You must adjust your lifestyle and savings goals well before January 1st of your seventh year.

The “Shield” Dissolves: Worldwide Income & Modelo 720

While you were under the Beckham Law, your foreign rental income and dividends were invisible to the Spanish Tax Agency. In Year 7, that protection disappears.

1. Worldwide Income: You must report and pay tax on all income earned anywhere in the world. While Double Taxation Treaties (DTT) usually prevent you from paying twice, Spanish rates are often higher than those in the US or UK, meaning you will likely pay a “top-up” tax to Spain.
2. Modelo 720: Between January and March of your seventh year, you must file this informative declaration. If you own a house in London or a brokerage account in New York worth over €50,000, the Spanish government now requires the full details.

Wealth Tax and the Solidarity Levy

One of the most hidden costs of the Year 7 transition is the Spanish Wealth Tax (Patrimonio). Under the Beckham Law, you only paid wealth tax on assets physically located in Spain. In Year 7, your entire global portfolio is subject to valuation.

In 2026, even if you live in a “tax-friendly” region like Madrid or Andalusia (which offer 100% regional bonuses), you are still subject to the National Solidarity Tax if your net global wealth exceeds €3 million. For high-net-worth individuals, this can result in a recurring annual tax of 1.7% to 3.5% on your assets.

Strategic Moves to Soften the Transition

To prepare for Year 7, we recommend three specific tactical shifts during your sixth year:

• Asset Repatriation or Liquidation: If you plan to sell foreign assets, do so in Year 6 while they are still shielded from Spanish capital gains tax.
• Pension Review: Understand how your foreign pension will be taxed. Unlike some countries, Spain treats most private pensions as regular income, not capital gains.
• Family Tax Splitting: If you are married, Year 7 allows for “Joint Filing” (Declaración Conjunta). This can be beneficial if one spouse has a significantly lower income, a benefit that was not available under the Beckham Law.

FAQs

Can I extend the Beckham Law for a few more years?

No. The law is strictly limited to the year of arrival plus five years. There are no extensions available, regardless of your professional status or investment level.

Does Year 7 affect my residency status?

No. Your right to live in Spain (your TIE or residency permit) is separate from your tax regime. You can remain a legal resident while transitioning to the standard tax system.

What happens if I forget to file Modelo 720 in Year 7?

While the European Court of Justice forced Spain to reduce the massive fines for Modelo 720 errors, the penalties are still significant. Failure to file can lead to audits and fines starting at €300 per missing asset category.

The Year 7 transition is the single most expensive day in an expat’s lifecycle. To model your post-Beckham tax liability and protect your global assets, book a 2026 Tax Transition Audit with our experts today.