The DGT confirms that the office of trustee and general director of a Spanish foundation counts as a directorship for the Beckham regime, and that foreign board seats are compatible

The Spanish Directorate-General for Taxation (DGT), in its binding ruling V2095-24 of 26 September 2024, examines whether a person who moves to Spain to become a trustee (patrono), chairman and general director of a Spanish foundation he himself sets up may elect the special regime of article 93 of Law 35/2006 of 28 November on Personal Income Tax (LIRPF).

The answer is yes. By reference to its ruling V3283-17 of 22 December 2017, the DGT considers that such a move falls within article 93.1.b).2 LIRPF, becoming a director of an entity. It adds that keeping a seat on the board of a foreign group, or taking up other directorships in the future, does not prevent the regime, provided that its requirements are met.

The legal framework

Article 93.1.b).2 LIRPF, as worded by Law 28/2022 of 21 December on the promotion of the start-up ecosystem, with effect from 1 January 2023, allows the regime where the move takes place “as a result of becoming a director of an entity” (our translation). The provision does not limit the concept to directors of companies.

Law 50/2002 of 26 December on Foundations treats the board of trustees (Patronato) as “a governing and representative body” of the foundation (article 14.1) responsible for “fulfilling the foundation’s purposes and diligently managing the assets and rights forming its endowment” (article 14.2). Under article 15.4, trustees serve without remuneration, although the board may, with the authorisation of the supervisory authority (Protectorado), set “appropriate remuneration for those trustees who provide the foundation with services other than those involved in performing their functions as members of the board” (our translation). This rule is what allows a trustee who also takes on the general management to be paid.

The facts

The applicant, a Spanish national, has been tax resident in the United Kingdom since 2014. He is the sole shareholder and a board member of a business group with a Luxembourg parent company, which has several wholly owned subsidiaries in Spain, and the majority shareholder of an investment company also based in Luxembourg.

He plans to cease his activities in the United Kingdom, set up a foundation in Spain and move his residence here to act as trustee, chairman and general director. The first two offices would be unpaid. As general director, with functions different from those of a trustee, he would receive remuneration, subject to approval by the board and authorisation by the supervisory authority. He states that this remuneration “will not be a particularly significant source of income in relation to the applicant’s overall economic situation” (our translation).

He would keep his seat on the board of the Luxembourg group and might join other boards in the future, paid or unpaid. Finally, he states that he has not been resident in Spain in the periods 2019 to 2023 and that he will not obtain income through a permanent establishment in Spain.

The DGT’s answer

The DGT recalls, as in the rest of its doctrine on this head of the regime, that “a causal link between the move to Spain and becoming a director is required” (our translation). Without that link the regime cannot apply, and whether it exists is a question of fact for the tax management and audit bodies, not for the DGT.

It then quotes articles 14 and 15 of Law 50/2002 and refers to V3283-17. As V2095-24 reports, in that ruling, concerning a person moving to Spain to become a trustee and general director of a Spanish foundation, the DGT stated that “the move on that basis falls within the case referred to in article 93.1.b).2 LIRPF (becoming a director of an entity)” (our translation). It should be borne in mind that V3283-17 was issued under the wording of the provision before Law 28/2022; the DGT considers the criterion still valid.

Its conclusion reads: “insofar as the applicant’s move to Spain takes place as a result of becoming a trustee and general director of the foundation, he may elect the special regime of article 93 LIRPF provided that the requirements of letters (a), (b) and (c) of article 93.1 LIRPF are met, even if he remains a member of the board of directors of the business group with a Luxembourg parent or, as he suggests, becomes a director of a company in the future” (our translation).

Characterisation of the remuneration

The DGT states that remuneration for the functions inherent in the office of director is employment income under article 17.2.e) LIRPF, which in all cases covers “the remuneration of directors and members of boards of directors, of bodies acting in their stead and of other representative bodies” (our translation).

Remuneration as general director, for different functions, would in principle also be employment income (article 17.1 LIRPF), a point the ruling does not expressly examine. In either case, under the special regime, that income is taxed under article 93.2 LIRPF: at 24 % up to EUR 600,000 and at 47 % on the excess.

Our assessment

In our view, the conclusion rests on the fact that the board of trustees is the foundation’s governing and managing body, with functions similar to those of a company’s board. The DGT does not set out that reasoning: it quotes Law 50/2002 and refers to V3283-17. But the reading is consistent with the wording of article 93.1.b).2, which refers to “an entity” without further qualification.

The ruling also dispels a reasonable doubt: that the regime might be jeopardised by holding the Spanish office alongside directorships outside Spain. The DGT accepts that combination, provided that the requirements of article 93.1 are met, including letter (c): not obtaining income through a permanent establishment in Spain.

The DGT says nothing about the amount of the remuneration as general director. That it is not significant in the applicant’s overall income is his own statement. In our view, what will be decisive is not the amount but whether the move is genuinely due to taking up the offices in the foundation.

Practical consequences

Causation is the point the ruling leaves open and which will have to be proven. The foundation’s incorporation, the appointment as trustee and general director and the move should be contemporaneous and documented, and actual dedication to the foundation should be reflected in its action plan and in the board’s minutes.

If the foundation intends to apply the tax regime of Law 49/2002 of 23 December on non-profit entities, it must meet its requirements, including allocating at least 70 % of its income to its purposes. It cannot be ruled out that a serious breach, casting doubt on whether the foundation’s activity is genuine, might also be relied on to challenge the causal link of the move.

Finally, holding seats on foreign boards while resident in Spain requires care as to where those functions are performed, so that the corresponding income is not characterised as obtained through a permanent establishment in Spain.