Spanish General Directorate of Taxes issues its first ruling on foreign sourced carried interest under the Beckham regime

In the field of asset management, carried interest constitutes the management team's share of the fund's profits, subject to the investments exceeding a pre-determined minimum return. Its singularity, from a tax perspective, lies in the time lag between the moment the right to receive it arises and the moment it is actually paid out. This time lag may span several years and, in the meantime, the professional may have changed their tax residence.

Binding ruling V5374-26, dated 28 July 2026, addresses this situation in the context of the special regime for inbound assignees provided for in Article 93 of the Personal Income Tax Act, known as the "Beckham regime", and sets out the conditions under which this remuneration may be exempt from Spanish taxation following relocation.

Background and facts of the case

The taxpayer, a tax resident in the United Kingdom, works for a London-based subsidiary of a pan-European alternative asset investment management firm with offices in various countries, including Spain. The management firm has entrusted him with leading the development of the Spanish market with regard to investment and fundraising activities, for which he will relocate to Spain and enter into a senior management contract with the local Spanish entity. The ruling is based on the assumption that the taxpayer will opt for the Beckham regime and that it will be granted to him upon meeting the legally required conditions.

As part of his remuneration plan, the taxpayer has been allocated participating points representing a percentage interest in the various funds in which the management firm has invested, and to the formation of which he has contributed by identifying investment opportunities in the secondary market, attracting investors and executing transactions through to the closing of the investment. These points are allocated through Luxembourg-based entities which group together the employees entitled to this remuneration.

Three aspects of the case are decisive for the ruling:

• Firstly, points are allocated on a transaction-by-transaction basis, at the time of the closing of each investment.
• Secondly, once allocated, the points confer a vested right to receive the full amount of the corresponding carried interest, without any condition of continued employment, except in exceptional cases of termination in bad faith.
• Thirdly, following the closing, the taxpayer performs no active tasks in relation to the investment beyond monitoring it for the purpose of preparing internal reports, as these are passive secondary market investments managed by a third party.

DGT's conclusions 

The Spanish General Directorate of Taxes (DGT)'s response makes clear that the key issue is not merely to determine when the income is received, but when and where the activity that generated it was carried out. On this basis, the ruling is structured around the interplay of three rules:

• As a general rule, Article 93.2.b) of the Personal Income Tax Act provides that all employment income earned by the taxpayer during the application of the special regime shall be deemed to have been earned in Spanish territory.
• However, Article 114.2.a) of the Personal Income Tax Regulations provides that income deriving from an activity carried out prior to the date of relocation to Spanish territory shall not be deemed to have been earned during the application of the special regime, without prejudice to its taxation where such income is deemed to have been earned in Spanish territory in accordance with the consolidated text of the Non-Residents' Income Tax Act.

Furthermore, Article 13.1.c).1) of the Consolidated Text of the Non-Residents' Income Tax Act provides that employment income is deemed to have been obtained in Spanish territory where it derives, directly or indirectly, from a personal activity carried out in Spanish territory.

On this basis, the DGT concludes that, since the carried interest which the taxpayer would receive during the application of the special regime derives entirely from work carried out before the date of relocation, such income will not be subject to taxation in Spain insofar as it does not derive, directly or indirectly, from a personal activity carried out in Spanish territory.

The decisive criterion is where the activity generating the remuneration is carried out, even if its quantification and payment take place subsequently.

Osborne Clarke comment

The conclusion of the DGT's ruling rests, however, on very specific premises. The reality is that carried interest schemes may incorporate vesting periods, good leaver and bad leaver clauses, and scenarios in which the entitlement is forfeited upon termination of the employment relationship. Where the entitlement depends on continued employment, taxpayers must assess whether the activity generating the income extends beyond the closing of the transaction. If it spans periods both before and after relocation, a pro rata allocation may be required, rather than a total exclusion.

This approach is also reflected in other DGT rulings, including V1112-25, concerning a bonus relating to the tax year prior to relocation, and V0813-23, relating to share plans with multi-year vesting periods.

For certain professionals and executives, carried interest may represent a significant portion of their expected wealth. 

Added to this is a further practical difficulty: the timing of receipt typically depends on when the fund is divested, a circumstance which, in most cases, is beyond the employee's control. It is therefore advisable, prior to relocation, to consider jointly tax residence, eligibility for the inbound assignee regime and the structure of deferred remuneration. In particular, it should be borne in mind that the Beckham regime has a maximum duration of six years and that, if the carried interest is received once that period has expired, the taxpayer will in all likelihood receive it as an ordinary tax resident in Spain, subject to tax on worldwide income and without the possibility of applying the rule under Article 114.2.a) of the Personal Income Tax Regulations, which is precisely the provision that is key to the ruling under consideration.