The Beckham regime for phantom shares

Phantom shares, phantom stock, stock appreciation rights and cash-settled equity plans are popular in startups because they promise equity-like economics without actually issuing shares. For a founder, executive or key employee relocating to Spain, that simplicity can be misleading. The plan may track the value of shares, but the holder may not own shares, may not have voting rights, may not receive dividends, and may only receive cash if a liquidity event, valuation milestone or exit occurs. Under Spain's Beckham Regime, that distinction matters. Real options and RSUs have one analysis; a contractual right to a future cash bonus can have another.

This page explains the Beckham planning question for phantom equity. It is a companion to our guide on stock options and RSUs under the Beckham Regime. The core difference is simple: options and RSUs normally involve actual shares or a right to receive them, while phantom shares often create a contractual payment measured by share value. That can push the analysis toward employment income, variable remuneration, payroll and timing.

"A phantom share plan has to be read as a contract, not just as a cap-table label. The tax result turns on what the holder actually receives, why they receive it, and when the trigger happens."

What phantom shares are

A phantom share plan gives a person an economic right that follows the value of shares, without necessarily giving them shares. A typical plan says that if the company is sold, or if a valuation event occurs, the holder receives a cash amount calculated as if they held a certain number of shares or as if they shared in the increase in value. A stock appreciation right works similarly: the holder may receive the growth in value above a base price, often without paying a strike price or becoming a shareholder.

The commercial attraction is obvious. The company can reward and retain key people without changing the cap table, dealing with minority shareholder rights, issuing actual shares, or forcing an employee to pay tax before they have cash. For a venture-backed or founder-led company, phantom equity can be a neat alternative where real options are too complicated or where investors do not want a person to become a shareholder.

But that same convenience creates the tax issue. If the holder never owns shares, the payout is not automatically a shareholder return. It may be a bonus or variable remuneration linked to employment or services. Under the Beckham Regime, that distinction is central because the flat-rate general base is built around qualifying active income, while savings income and capital gains are analysed separately.

Why they are not normal stock options

Stock options and RSUs have their own familiar life cycle: grant, vesting, exercise or delivery, and later sale. Our equity compensation guide explains why the employment-income moment and the later capital-gain moment are separate. Phantom equity usually changes that life cycle. The employee may never exercise anything, may never receive shares, and may never sell an asset. They may simply receive a cash payment under a contract.

Feature	Stock options / RSUs	Phantom shares / SARs
Underlying asset	Actual shares or a right to receive shares	Contractual right measured by share value
Shareholder status	Possible after exercise or delivery	Usually none
Cash needed by holder	Options may require strike payment	Usually no investment by the holder
Typical payout	Shares, then possible sale proceeds	Cash bonus or cash-equivalent amount
Main tax question	Vesting/exercise vs later sale	Whether the payout is remuneration, when it is obtained, and where it is sourced

That does not make phantom equity bad. It just means the label "equity" should not drive the tax answer. The plan document, employment agreement, board approvals, vesting schedule and payout clause need to be read together.

The Beckham starting point

The Beckham Regime is the special regime in Article 93 of the Spanish Personal Income Tax Act for workers, professionals, entrepreneurs and investors displaced to Spanish territory. Broadly, a person who becomes Spanish tax resident after the required prior non-residence period and moves for a qualifying reason can elect to be taxed under the special regime for the year of the move and the following five years. The headline rate is 24% up to €600,000 on the qualifying general base, with 47% on the excess.

For phantom equity, the important rule is not the headline rate but the character of the payout. Article 93 has a deemed-obtained-in-Spain rule for employment income obtained during the regime. If a phantom payout is properly characterised as employment income or service remuneration obtained during the covered years, the flat-rate analysis may be available. If the payout is something else, the answer can change.

The election mechanics also matter. The option, renunciation or exclusion from the regime is communicated through Modelo 149, and the income is later reported through the special filing mechanics. A plan that may pay out during the first year in Spain should be reviewed before the Modelo 149 file is submitted, not after the company sale closes.

Employment income or capital gain?

Phantom equity is often described commercially as "equity", but Spanish tax and employment analysis may treat the payout as variable remuneration. That is especially likely where the holder receives the right because they are an employee, executive, director or founder-service provider; where vesting depends on continued service; and where the plan pays cash rather than shares. In those cases, the plan often behaves more like a bonus linked to company value than like a disposal of shares.

This is the key difference from a real share sale. If you own shares and sell them, the sale usually raises a capital-gains question. If you only have a contractual right to be paid when someone else sells the company, you may not be realising a gain on an asset you own. You may be receiving remuneration because you helped build the company.

A phantom payout can be equity-like economically and salary-like legally. Beckham planning has to follow the legal character, not the pitch-deck language.

The consequence can be favourable or unfavourable depending on the facts. If the payout is employment income obtained during the regime, the Article 93 general-base mechanics may help. But if it is paid by a Spanish employer, through Spanish payroll, or after the regime has ended, the analysis may produce a different result. Social Security and withholding can also become part of the file, which is why the company-side payroll team should be involved early.

Payout triggers and timing

Timing decides many phantom-share cases. A phantom plan normally pays only when a trigger occurs. Common triggers include a company sale, IPO, change of control, valuation round, EBITDA target, termination event, vesting date or board-approved payout window. The holder moving to Spain should calendar every possible trigger against four dates: arrival in Spain, Spanish tax-residence start, Beckham election date, and the end of the covered years.

• Trigger before arrival - the payout may belong to the pre-Spain period, even if cash is received later. Accrual and payment timing need review.
• Trigger during the Beckham years - this is the scenario where the flat-rate employment-income analysis is most likely to matter.
• Trigger after the regime ends - the ordinary Spanish resident rules may apply if the person remains resident.
• Trigger after departure - the answer depends on residence, source, treaty position and whether the income relates to work performed in Spain.

The drafting can change the answer. A plan that says the holder earns the right progressively over years may raise apportionment questions. A plan that says nothing is earned until a board-approved liquidity event may point to a different tax point. A leaver clause can matter too: good leaver, bad leaver, garden leave and post-termination vesting provisions can all affect whether the right was earned as remuneration for work.

Startup Law stock-option rules

Spain's Startup Law, Law 28/2022, improved the tax treatment of certain startup stock options and share deliveries. In broad terms, it increased the annual exemption for shares or participations delivered to employees of qualifying startup companies to €50,000, and it introduced timing and valuation rules for certain startup equity. Those measures are important for actual shares and options.

They should not be copied automatically onto phantom equity. A cash-settled phantom plan may not involve the delivery of shares or participations at all. It may be a contractual bonus measured by equity value. If so, the startup stock-option exemption may not be the right tool. The plan needs a separate review rather than a shortcut.

For founders and startup employees, the clean approach is to run both analyses: first, does the plan qualify for any startup equity rule on its own terms; second, if not, how is the phantom payout characterised under the Beckham Regime and ordinary employment-income rules?

Founder and executive scenarios

Phantom equity appears in several founder relocation files. A late co-founder may receive phantom rights because the original cap table is already fixed. A key executive may receive a phantom plan instead of options because the company wants retention without shareholder complexity. A seller-founder may receive a cash-settled earn-out described internally as phantom equity. Each case has a different tax map.

Scenario	Why phantom equity is used	Spanish planning point
Late co-founder	Economic upside without changing the cap table	Confirm whether payout is service remuneration or a genuine capital interest
Key executive	Retention bonus linked to exit value	Likely employment-income framing; payroll and timing matter
Seller-founder	Post-closing incentive or earn-out substitute	Separate sale price, earn-out and service compensation carefully
Spanish subsidiary leader	Foreign parent keeps equity pool centralized	Check employer, payroll, source and permanent-establishment consistency
Advisor or board role	Cash upside for strategic contribution	Character may differ from employee income; document the role precisely

The seller-founder version is especially sensitive. If a founder sells a business and agrees to remain as director, executive or consultant, a later payout can be purchase price, earn-out, non-compete compensation, consulting income, director remuneration or phantom equity. Those labels are not interchangeable. Our pages on earn-outs and deferred consideration, non-compete and consulting pay, and director or consultant roles after selling should be read together with this one.

US person issues

US citizens and green-card holders need a second column. A phantom share or stock appreciation right can be taxed in the United States under rules that do not line up perfectly with Spain. Timing, source, deferred-compensation rules, payroll reporting, foreign tax credits and treaty relief may all matter. The Spanish Beckham election does not switch off US filing, and it does not guarantee that a US ordinary-income event and a Spanish employment-income event happen in the same year.

For Americans, the practical file should include the plan document, grant letter, vesting schedule, payout formula, employer entity, payroll jurisdiction, expected liquidity event, W-2 or 1099 position if relevant, and the US adviser's view of the recognition event. That file then has to be mapped against the Spanish move date and Beckham years.

US founders with foreign companies should also consider whether their day-to-day activity from Spain creates company-level exposure. The individual Beckham election is not a shield for a foreign company managed from Spain. Our guide to foreign company owners and permanent establishment covers that company-side risk.

Pre-move checklist

Before relocating to Spain with phantom equity, build the plan in writing. The work is not complicated in concept, but it is easy to do too late.

• Collect the plan rules, grant letter, board approval, side letters and leaver provisions.
• Identify whether the holder ever receives actual shares or only cash.
• Map each vesting and payout trigger to the intended Spain arrival date and Beckham years.
• Confirm who pays: foreign parent, Spanish subsidiary, buyer, escrow agent or payroll provider.
• Separate phantom equity from sale price, earn-out, non-compete pay, director fees and consulting income.
• Check whether any Startup Law stock-option rule genuinely applies, rather than assuming it does.
• For US persons, coordinate the Spanish analysis with a US tax adviser before the liquidity event.
• Make the position consistent with the Beckham master guide, Modelo 149 file and the route used to live and work in Spain.

Done properly, phantom equity can be planned. Done casually, it can surprise everyone at exactly the wrong moment: when the company is sold, payroll has to withhold, the founder is already Spanish tax resident, and the Beckham election is no longer just a future idea.

Sources reviewed July 2026: Article 93 of the Spanish Personal Income Tax Act (Ley 35/2006) as amended by Law 28/2022; Agencia Tributaria guidance on the special regime for displaced workers and Modelo 149; BOE Law 28/2022 provisions improving certain startup stock-option and share-delivery treatment; Spanish employment-law commentary on phantom shares as employment-related variable remuneration; and general equity-plan references on phantom stock and stock appreciation rights as contractual cash or cash-equivalent plans. General information only, not legal or tax advice. Phantom equity is document-specific and should be reviewed before relocation or payout.