Southern Europe is openly competing for wealthy and talented movers, and the competition is fought with special tax regimes. Spain has the Beckham law, Italy has its flat tax on foreign income, and Portugal, having wound down the famous NHR, offers a narrower successor. To a person deciding where to land, these are not interchangeable; each favours a very different profile, and choosing by reputation rather than by fit is how people end up in the wrong country for their money.
The three are also moving. Italy has raised its charge twice in two years, Portugal replaced its regime outright, and Spain widened its entry door. A comparison built on how they read three years ago will be wrong on all three counts.
Spain: the Beckham law
Spain’s regime for inbound workers applies a flat rate to Spanish employment income up to a threshold for a set number of years, while largely leaving foreign income outside the Spanish net, and it has been widened to reach more remote workers and entrepreneurs. It suits the person taking up genuine activity in Spain, an executive, a founder relocating their work, who wants a favourable, predictable rate on what they earn there. We set it out in our note on the Beckham law.
Article 93 of the Spanish personal income tax law requires five tax periods of non-residence, then a qualifying trigger: an employment contract, a posting, remote work through telecommunications alone, a directorship, an entrepreneurial activity, or highly qualified work for startups. Professional sportspeople are excluded, and so is permanent establishment income, save where it arises from the entrepreneurial or highly qualified routes in article 93.1.b), the only economic activities the regime permits. Income within the regime is taxed at 24 per cent up to 600,000 euro and 47 per cent above, with dividends, interest and gains on a separate scale from 19 to 30 per cent.
The option goes on form 149, within a six-month window from the start of activity in the social security registration, and covers the year of the move and the five that follow. Under the waiver and exclusion rules, waiver is possible only in November or December, and whoever waives can never opt back in. Exclusion bites in the period the condition is broken, not when noticed.
Italy: the flat tax on foreign income
Italy offers new residents the option to pay a fixed annual amount to shelter their foreign income and gains, regardless of how large those are, for a long window. It is built for the person whose wealth and income sit largely outside the country and are substantial: for a large enough foreign income, a fixed annual charge is extraordinarily efficient. We describe it in our note on the Italian flat-rate regime.
Entry turns on history, not on activity. Article 24-bis of the Italian income tax code is open to anyone not tax resident in Italy for nine of the ten preceding tax periods, and asks nothing about what they do next. The applicant names the jurisdictions of last residence, which the revenue agency passes to the authorities there. The charge has been raised twice: 100,000 euro a year until 10 August 2024, then 200,000 euro, and the revenue agency’s page on the option records that the 2026 budget law took it to 300,000 euro from 1 January 2026, with each family member rising from 25,000 to 50,000 euro.
What the charge does not cover matters as much as what it does. It runs fifteen years and renews tacitly, but Italian source income stays under ordinary rates, and gains on qualified participations in the first five periods are carved out. The taxpayer may also leave named foreign states outside the option, restoring ordinary taxation there together with the credit for tax paid at source, which an exemption would otherwise destroy. Payment falls due in one instalment, and a missed or partial payment ends the regime for good, as the circular on the inbound regimes confirms.
Spain rewards the person who earns inside it. Italy rewards the person whose money sits outside it. Portugal now asks what you actually do. The mistake is choosing by fame, not by fit.
Portugal: after NHR
Portugal’s original non-habitual resident regime, which drew so many, has been closed to new entrants and replaced by a narrower incentive focused on certain qualifying activities and roles rather than a broad exemption on foreign income. The country remains attractive, but the sweeping version many remember is gone, and the successor has to be assessed on its actual, tighter terms, as we discuss in our note on Portuguese investors and the NHR.
The tax authority confirms the repeal of the non-habitual resident regime from 1 January 2024, subject to the transitional rule in article 236 of Law 82/2023, with anyone already registered keeping it until the ten years run out. The successor is article 58-A of the tax benefits statute, the incentive for scientific research and innovation. It keeps the five-year absence, then adds what the old regime never had: the income must arise from a listed activity, among them research, higher education, defined professions in exporting or investment-backed companies, and posts in certified startups. It gives 20 per cent on net employment and self-employment income for ten years, once only.
Screening falls largely to bodies other than the tax authority, and the right is earned again each year by drawing listed income. The published questions on the incentive draw the edges tightly: a shareholder does not qualify in that capacity, and a services contract is not a job for most categories. Foreign income is broadly exempt, pensions excepted, while income from a listed favourable jurisdiction is taxed at 35 per cent.
Who is shut out before the arithmetic starts
Each of the three is an election, and elections close. The look-back is the first filter and it differs: five years for Spain and Portugal, nine of the ten preceding periods for Italy. Someone who spent part of the last decade in Italy is outside that regime however large the foreign income, and no structuring repairs it.
The second filter is what the person will do on arrival. Italy asks nothing. Spain asks for a qualifying trigger, and then bars permanent establishment income unless the trigger was the entrepreneurial or highly qualified route. Portugal asks for a listed activity, excluding the passive holder of capital. The widest gate carries the highest price.
The third filter is prior use. Portugal bars anyone who held the old status or elected the returning residents relief, and article 58-A allows one use per taxpayer. Italy bars anyone who has revoked or forfeited, Spain anyone who has waived. None allows a trial year, and each runs on a filing deadline that can cost the regime.
Treaty access and the residence certificate
A regime only works if the countries paying the income accept that the person has moved. The double taxation conventions ask whether the person is liable to tax as a resident of the new state, not whether the bill is large.
Spain answers in the statute. Someone under the displaced workers regime is taxed by reference to the non-resident rules but keeps the status of personal income tax taxpayer, which is what the treaties look to, as the tax agency’s description of the regime confirms. Italy answers in guidance: the circular on the inbound regimes treats those exercising the article 24-bis option as resident for treaty purposes too, because the whole of their income bears tax in Italy, unless the convention provides otherwise.
Where both states claim the person, the tie-breaker in article 4 of the OECD Model Convention applies in order: permanent home, centre of vital interests, habitual abode, nationality. The Italian circular on the reformed residence tests works through that sequence and notes that the revised domestic tests can create conflicts that did not previously arise. A certificate of residence does not settle a tie-breaker; it opens the argument.
The company that moves with its owner
What decides most of these cases is not where the person lives but where the company is managed from. All three countries treat effective management as a residence test for companies, so someone who relocates and keeps running a foreign company can move its residence without intending to.
Spain treats an entity as resident when its effective management seat is in Spain, and article 8 of the corporate income tax law defines that as the place where the direction and control of the whole of its activities is located. Italy rewrote its test in 2023, and the guidance on the reformed residence rules sets out the result: the seat of effective management is the continuous and coordinated taking of the strategic decisions concerning the company as a whole, and shareholder decisions do not count unless they carry management content.
If the foreign company becomes resident in the new country, its profits and distributions are domestic income. In Italy that places them outside the substitute tax, which covers only income produced abroad. In Spain, permanent establishment income is not merely taxable but disqualifying, unless the person entered by the entrepreneurial or highly qualified route.
What an authority examines is mundane. Where board meetings were held and minutes signed. Whose signature commits the company, and from where. Travel records placing the decision maker at the time. Powers of attorney given to local directors, and whether used.
Match the regime to the money
The right choice follows the shape of the person’s wealth and life. Large foreign income and few local ties point one way; genuine local activity and earnings point another; a specific qualifying profession may point to a third. And the regime is only part of the picture, because the wealth taxes, the succession rules and the ownership of any home all differ by country too, which is why we treat the relocation as one coordinated decision rather than a single-regime comparison, alongside our notes on the Spanish wealth tax and where a wealthy family should base.
Capital is where the three diverge most and the headline rates say least. Article 93 puts the Spanish optant under wealth tax on a real obligation basis, confining the charge to assets located in Spain, after which regional differences take over. Italy goes further: under the 2017 budget law that introduced the regime, inheritance and gift tax on successions and gifts arising while the option is valid is due only on assets existing in Italy, which the revenue agency reads as reaching assets settled on trust. Portugal offers nothing equivalent.
Each of these protections is bounded by the option itself, and the estate does not end when the regime does. Spain gives six filing years, Portugal ten, Italy fifteen, and each ends with the person still resident and taxed like everyone else. The exit is the part written last and needed first. And because the Italian charge is fixed rather than proportional, it is a break-even calculation: below a certain level of foreign income it is the dearest of the three.
Montclare advises international individuals and families on buying, holding and moving to Spain: the structure, the tax, the residence and the succession, handled as one plan. Our services are set out on our services page.
This article is informational and does not constitute tax, legal or immigration advice. Spanish regimes vary by region and change frequently, and treatment depends on personal circumstances. Each engagement is subject to scope and applicable regulation.