The 100 % quasi-shareholder may benefit from the Beckham regime since Law 28/2022, unless the entity is a passive-wealth entity

The Spanish Directorate-General for Taxation (DGT), in its binding ruling V1983-24 of 17 September 2024, consolidates a doctrine of direct relevance to executives and founders relocating to Spain under the special inbound regime —the so-called Ley Beckham— who, in the context of their arrival, take controlling shareholdings in the Spanish company through which they carry on their activity. Following the reform introduced by Law 28/2022 of 21 December on the promotion of the start-up ecosystem, an administrator holding 100 % of the share capital of a Spanish non passive-wealth entity may benefit from the regime of article 93 of the Personal Income Tax Act (LIRPF), provided that the remaining legal requirements are met.

It is helpful to begin with the legislative framework, because the interaction between the provisions —before and after Law 28/2022— is the operative key to the regime.

Article 93.1.b).2 of the LIRPF, in its wording prior to Law 28/2022, required that the relocated administrator not hold any share in the capital of the entity or hold a share that did not trigger characterisation as a related entity under article 18 of the Corporate Income Tax Act (LIS). The threshold, under article 18.2.b) of the LIS, was 25 % direct or indirect participation. Beyond that limit, the regime did not apply. The restriction had generated significant litigation: founders and majority shareholders relocating to Spain were materially excluded from the regime, even though their economic profile was identical to that of any other inbound worker.

Law 28/2022 reformed the provision at a critical point. With effect from 1 January 2023, the legislator removed the 25 % restriction generally and confined it solely to cases where the participating company qualifies as a passive-wealth entity under article 5.2 of the LIS. The stated purpose was to favour the attraction of talent and founders to Spain, without penalising majority shareholding control where exercised over an operating business.

The case under review reflects the typical profile of the reform. The requestor, a German national previously resident for tax purposes in the United Kingdom, was the founder and chief executive officer of a Swiss company investing in start-ups. In the context of his relocation to Spain, he proposed to incorporate a Spanish holding subsidiary held indirectly at 100 %, from which he would carry on administrator functions. The question put to the DGT was direct: could he benefit from the Beckham regime despite that 100 % holding?

The DGT confirms the application of the regime and articulates its response on three pillars that warrant separate treatment, because each contributes an operative key.

First, the causal link between the relocation and the acquisition of administrator status. The DGT recalls, expressly citing its ruling V0971-24 of 9 May 2024 —which V1983-24 reproduces and consolidates— that “the existence of a causal relationship between the relocation to Spain and the acquisition of administrator status is required”. This requirement operates as a filter: the regime does not protect situations in which administrator status pre-existed the relocation and is maintained without effective connection to the arrival in Spain.

Second, the general non-application of the former participation threshold. The DGT stresses that, following Law 28/2022, the 25 % participation cap “applies only where the entity qualifies as a passive-wealth entity”. For non passive-wealth companies, the administrator’s shareholding is irrelevant for the purposes of the regime: the requestor may hold 100 % of the share capital and still benefit from article 93 of the LIRPF.

Third, the content of the concept of passive-wealth entity. The DGT refers uniformly to article 5.2 of the LIS, which characterises as a passive-wealth entity any company whose main activity consists of the management of movable or immovable wealth not used in business activities. The computation is quarterly and is made on total assets. The decisive question is whether more than half of the assets are made up of securities or of elements not used in a business activity.

The DGT also identifies certain substantive guidance on the passive-wealth assessment that warrants separate retention.

First, on holding companies. A holding company carrying on active management of shareholdings —holding at least 5 % of the share capital of its subsidiaries and endowed with material and human resources for their direction and management, under article 5.2.d) of the LIS— does not qualify as a passive-wealth entity. A merely passive holding company, without resources or effective direction, does qualify.

Second, on real-estate activity. The activity of buying, refurbishing and reselling property —so-called flipping— may qualify as a business activity where an effective organisation of resources concurs. Letting activity, in contrast, qualifies only where the requirement of article 5.1 of the LIS is met (a full-time employee under an employment contract).

In all cases, the assessment is case-by-case and is projected onto the factual substrate of each transaction.

Applying this test to the case under review, the Spanish holding company projected by the requestor —dedicated to the active management of shareholdings in start-ups, with the relevant organisation of resources— would not qualify as a passive-wealth entity. The 100 % shareholding is, therefore, compatible with the application of the Beckham regime.

In our view, the DGT’s doctrine is consistent with the stated purpose of Law 28/2022 and with the logic of the regime itself. The 25 % restriction in force prior to the reform responded to a concern —legitimate at the time— that the Beckham regime could be used as a planning vehicle by shareholders of passive-wealth companies with little operating substance. The reform shifts that filter to the concept of passive-wealth characterisation, which is more precise and more exacting: what matters is not the percentage of shareholding but the economic nature of the activity.

Subject to the above, the doctrine signals two operative caveats that warrant separate retention.

First, the passive-wealth assessment is substantive and case-by-case. It is not enough to formally characterise the entity as operating. If the assets are predominantly made up of securities that do not meet the exclusions of article 5.2.a) of the LIS —notably the shareholding of at least 5 % with effective management— or if the material and human resources are insufficient to evidence active management, the company may be recharacterised as a passive-wealth entity. In that case, the former 25 % threshold revives and the 100 % shareholding blocks the regime.

Second, the computation under article 18 of the LIS, applicable only where the entity is a passive-wealth entity, includes the shareholdings of the spouse, ascendants and descendants within the related-party group. The DGT has applied this rule consistently in cases of family real-estate investment. The inbound worker who shares ownership with the family unit must aggregate the shareholdings for the purposes of verifying whether the combined holding exceeds 25 %.

The practical consequence is highly relevant for the planning of the arrival in Spain.

It is advisable, in the first place, to calibrate the characterisation of the participating company prior to the relocation. Planning must verify that the projected entity meets the substantive requirements not to qualify as a passive-wealth entity under article 5.2 of the LIS: actual business activity or, where appropriate, active management holding with the relevant organisation of resources.

It is advisable, in the second place, to document that characterisation contemporaneously. The incorporation deed, the business plan, the employment contracts of personnel assigned, the minutes of the administrative body with operational decisions and documentary evidence of the organisation of resources constitute the defensive evidential file against a possible recharacterisation by the inspection.

It is advisable, in the third place, to monitor the composition of the assets throughout the period of application of the regime. The passive-wealth computation is quarterly. A significant change in the composition of the balance sheet —liquidation of operating investments and accumulation of cash or unused securities— may trigger a supervening recharacterisation of the company as a passive-wealth entity, with the consequent loss of the regime in the case of the quasi-shareholder.

In conclusion, what this new ruling of the Directorate-General for Taxation makes clear is that Law 28/2022 has shifted the filter of the Beckham regime applicable to the administrator-shareholder: the 25 % participation threshold no longer applies generally but only where the participating entity qualifies as a passive-wealth entity under article 5.2 of the LIS. For operating companies and active-management holdings, the 100 % shareholding is fully compatible with the application of article 93 of the LIRPF, provided that the remaining legal requirements concur and, in particular, the causal link between the relocation to Spain and the acquisition of administrator status.

Sources

• Directorate-General for Taxation, binding ruling V1983-24 of 17 September 2024, Sub-Directorate-General for Personal Income Tax: petete.tributos.hacienda.gob.es.
• Directorate-General for Taxation, binding ruling V0971-24 of 9 May 2024, antecedent that V1983-24 reproduces and consolidates: petete.tributos.hacienda.gob.es.
• Law 28/2022 of 21 December on the promotion of the start-up ecosystem: BOE-A-2022-22685.