The Beckham regime against the four-year FIG window; an annual wealth tax considering the IHT position. Why the choice between London and Madrid belongs in the portfolio review, not the political debate.
Politicians argue about whether to tax income or to tax wealth as though it were a question of values. When I sit with a family moving between London and Madrid, it is a question of arithmetic — and the arithmetic is rarely neutral. The decision resembles a portfolio review far more closely than it resembles a political argument.
The political frame conceals a financial fact
Every few months the debate returns in the same costume. One side says the productive should not be punished: tax income lightly and let capital compound. The other says accumulated wealth has escaped its fair share: tax the stock directly. It is presented as ideology and reported as positioning, when in truth the choice between taxing income and taxing wealth is one of the largest single variables in the after-tax return of a portfolio.
The noise around it is loud and interested. One migration report projects a record outflow of millionaires from the United Kingdom, while the tax authority’s own figures suggest departures broadly in line with forecasts. At the same time a serious academic movement, led from the EU Tax Observatory, presses for a coordinated minimum levy on the very largest fortunes. Both camps are sincere, and both have an interest. The family in front of me has neither the luxury of ideology nor the appetite for it. They simply want to know what a move will cost.
Stock versus flow
The distinction that matters is simple, and it is decisive. An income tax is a charge on the flow — on the yield an asset produces. A wealth tax is a charge on the stock — on the value of the asset itself, whether or not it earned anything that year. An inheritance or transfer tax is a charge on the stock at a single moment between generations.
Spain’s own Constitutional Court has drawn exactly this line. Upholding the Impuesto Temporal de Solidaridad de las Grandes Fortunas, created by the Ley 38/2022, de 27 de diciembre, the court reasoned in its Sentencia 149/2023, de 7 de noviembre, that the charge would become confiscatory only if it consumed the value of the patrimony itself rather than the income those assets produce. That is a revealing concession. It accepts, in a single sentence, that a tax on the stock is a different and heavier thing than a tax on the flow.
Why a wealth tax changes the return you need
An asset yielding two per cent shows why. A wealth tax of two per cent on the capital value of that asset consumes its entire real income before a single unit of income tax is applied. At the highest Spanish bands, which reach three and a half per cent on the largest fortunes, the annual charge can exceed everything the asset produces; in a flat year it is paid out of capital. A tax on wealth is, in substance, a tax on the principal, dressed as an annual levy.
This is why Spain caps the combined burden. The límite conjunto in article 31 of the Ley 19/1991, de 6 de junio, del Impuesto sobre el Patrimonio limits wealth and income tax together to sixty per cent of income, subject to a minimum of twenty per cent of the wealth tax quota remaining payable. In a series of rulings in late 2025 the Supreme Court extended that ceiling to non-residents on European free-movement grounds, opening a refund route that many who overpaid have not yet used.
For an investor, the practical effect is on profitability: a wealth tax raises the yield an asset must earn merely to stand still. It moves the hurdle rate, and any allocation that ignores it is quietly wrong.
Six years in Madrid, four years in London: the special regimes compared
Both jurisdictions know their own weaknesses, and both sell an antidote at the door. The comparison is more instructive than either regime read alone.
Spain’s offer is the impatriate regime of article 93 of the Ley 35/2006, del IRPF, universally known as the Beckham regime. It asks for five tax years of prior absence and gives six: the year of arrival and the five that follow. During that window, Spanish employment and professional income is taxed at a flat twenty-four per cent up to six hundred thousand euros and forty-seven per cent above, while foreign investment income and gains sit outside Spanish tax altogether. Wealth tax — and the solidarity tax — apply only to Spanish-situs assets, and the Modelo 720 disclosure of foreign assets does not apply. For a working principal whose wealth remains abroad, Spain temporarily behaves like a territorial system with a modest flat charge on the salary.
The United Kingdom’s offer, since the Finance Act 2025 abolished the remittance basis and retired domicile as a connecting factor, is the Foreign Income and Gains regime. It asks for ten consecutive tax years of prior absence and gives four. Within them, foreign income and gains are relieved in full on claim and may be brought to the United Kingdom freely, at the price of the personal allowance and the capital gains annual exemption. UK earnings are taxed in full from day one, softened only by a recast Overseas Workday Relief capped at the lower of thirty per cent of employment income or three hundred thousand pounds a year. After year four the arising basis applies to everything; and after ten years of residence in any twenty, the estate is within inheritance tax worldwide, with a tail that follows the emigrant for up to a decade.
Read together, the two windows answer different questions. Spain shelters the executive who earns; Britain shelters the rentier who has already earned. And the entry tickets are asymmetric: a British family that has spent six years in Madrid cannot use the FIG regime on its return, because ten clean years are required, while a Spanish family returning from London after five years abroad can qualify for Beckham treatment.
The ordinary-residence arithmetic
Once the windows close, the structural character of each system takes over, and it is here that the rates belong.
| Spain | United Kingdom | |
| Special regime for arrivals | Impatriate (“Beckham”) regime, art. 93 Ley 35/2006 (LIRPF) | Foreign Income and Gains (FIG) regime, Finance Act 2025 |
| Prior absence required | 5 tax years of non-Spanish residence | 10 consecutive tax years of non-UK residence |
| Duration | 6 tax years (year of arrival plus five) | 4 tax years from arrival, consecutive |
| Employment income | 24% flat up to €600,000; 47% on the excess | Taxed in full at 20/40/45%; Overseas Workday Relief capped at the lower of 30% of employment income or £300,000 a year |
| Foreign investment income and gains | Outside Spanish tax entirely (non-employment foreign income is not taxed) | 100% relief on claim, freely remittable; the claim forfeits the personal allowance and the CGT annual exempt amount |
| Annual wealth tax during the regime | Spanish-situs assets only (obligación real); no Modelo 720 on foreign assets | None — the UK has no wealth tax |
| Top rates once ordinarily resident | IRPF general scale to c. 45–54% by region; savings income 19–30%; wealth tax 0.2–3.5% plus solidarity tax above €3m, together capped at 60% of income (art. 31 LIP) | Income 45%; dividends 39.35% (lower bands 10.75/35.75% from April 2026); savings and property rising to 22/42/47% from April 2027; CGT 18/24% |
| Death and transfer | ISD devolved: close-family transfers relieved to near zero in Madrid and Andalucía, material in other regions | IHT at 40% above the nil-rate bands; worldwide exposure once resident 10 of the previous 20 tax years, with a tail of up to 10 years after departure |
| What is being taxed | The flow, plus an annual charge on the stock, with the generational event regionally forgiven | The flow, increasingly heavily, plus the stock once per generation at 40% |
Indicative position for 2026, general rules; regional scales, allowances and treaty relief will move the figures for any given family.
Two movements deserve notice. The United Kingdom, having renounced the wealth tax it never had, is quietly raising the price of the flow: dividend rates rose two points from April 2026, savings and property income rise to a forty-seven per cent top rate from April 2027, and a high-value council tax surcharge arrives for two-million-pound homes in 2028. Spain, meanwhile, has made the solidarity tax effectively permanent, neutralising the regional relief that Madrid and Andalucía grant on the wealth tax proper for fortunes above three million euros. Each system is becoming more intensely itself.
The enforcement backdrop is not theoretical
None of this happens in a vacuum of goodwill. On 2 July 2026 the Spanish Agencia Tributaria reported that it had assessed 547 million euros across 1,329 inspections directed at large fortunes. Whatever one thinks of that campaign, it makes the same point from the other side of the table: the kind of tax a country chooses is also the kind of scrutiny it will apply, and a decision taken casually is a decision taken exposed.
A decision rule, family by family
My own conclusion, after years of these conversations, is unfashionably practical, and it can be stated as a decision rule rather than a preference.
For a horizon of up to four years, with wealth held abroad in investment form, London is normally the cheaper room: the FIG regime takes the foreign flow to nil, there is no annual charge on the stock, and inheritance tax has not yet attached. For a horizon of up to six years built around employment or directorship income, Madrid competes hard: twenty-four per cent on the salary, nothing on the foreign portfolio, wealth tax confined to Spanish assets.
It is the long residence that divides the systems at the root. The United Kingdom taxes the flow with increasing severity and then taxes the stock once, at forty per cent, at the generational event, worldwide. Spain taxes the flow comparably, taxes the stock every year at up to three and a half per cent, capped against income, and then — in Madrid or Andalucía — largely forgives the generational event within the close family.
A family holding long-term growth assets with modest yield, prepared to plan the succession, is structurally suited to the British model. A family holding liquid, income-producing wealth, whose priority is passing it intact to the children, may find that a Spanish region beats the United Kingdom over a full generation despite the annual levy — because sixty years of capped wealth tax can cost less than one uncapped charge of forty per cent on everything.
The decisive variables, then, are not the headline rates at all. They are the liquidity and yield of the balance sheet, the region of Spain in question, the length of the horizon, and the expected date of the generational transfer. A tax decision deserves the same treatment as an investment decision: quantified, tested against the alternatives, revisited as the law and the family change, and placed inside the portfolio review rather than bolted on in the weeks before a move. It is modelled in a spreadsheet, not asserted in a memorandum.
So I would leave any family weighing a move between Spain and the United Kingdom with a single question. When you last decided where to hold your wealth, did you model the kind of tax you would face, or only its rate — and did that model sit beside your investment case, or in another room entirely?
This article reflects a personal opinion and does not constitute legal advice.
León Fernando Del Canto
Sources and further reading
Tribunal Constitucional, Sentencia 149/2023, de 7 de noviembre (BOE-A-2023-25631).
Ley 38/2022, de 27 de diciembre, que crea el Impuesto Temporal de Solidaridad de las Grandes Fortunas (art. 3).
Ley 19/1991, de 6 de junio, del Impuesto sobre el Patrimonio (límite conjunto, art. 31).
Ley 35/2006, de 28 de noviembre, del IRPF (régimen de impatriados, art. 93).
Finance Act 2025 (abolition of the remittance basis; Foreign Income and Gains regime) and HMRC helpsheet HS266.
HMRC, Check if you can claim the 4-year foreign income and gains regime.
Finance Act 2026 (rates of tax on dividend, savings and property income).
Agencia Tributaria, Impuesto Temporal de Solidaridad de las Grandes Fortunas, sede.agenciatributaria.gob.es.
EU Tax Observatory, A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals.
OECD/G20 Inclusive Framework, Two-Pillar Solution.