Earn-outs and deferred consideration under the Beckham Regime

Most founder exits are not settled in a single wire on completion day. Modern deals spread the value across escrow accounts, holdbacks, seller notes, contingent value rights and multi-year earn-outs, some of which depend on the founder continuing to work after the sale. When the founder is also relocating to Spain under the Beckham Regime, each of these tranches can land in a different tax world. This page is about reading a deferred-consideration structure the way the tax system reads it, rather than the way the term sheet summarises it.

It builds on two related guides without repeating them. Our page on selling before or after moving to Spain covers the broad pre-arrival cut line, and our guide to liquidity event timing maps the full six-year window and the year-seven cliff. This page zooms into one recurring problem: what happens when the money arrives in pieces, over years, some of it contingent, some of it tied to future work.

"With earn-outs the mistake is treating the whole deal as one event. We map each tranche to a date and a character before signing, because after signing we can only explain what the documents already decided."

The anatomy of deferred consideration

Deferred consideration is any part of the sale price that is not paid, fixed or certain at closing. In practice it takes several forms. There is escrow, where an agreed amount of the price sits with a third party and is released later if no claims arise. There is a holdback, where the buyer keeps part of the price against warranty or indemnity risk. There is a seller note or vendor loan, where the buyer pays over time with interest. There is a contingent value right, where the seller receives more if a milestone is met. And there is the earn-out proper, where additional consideration depends on the acquired business hitting revenue, profit or product targets after completion.

These structures matter for a relocating founder because they stretch a single sale across multiple tax years and, often, across a change of tax residence. The value that felt like "the exit" may in fact be spread from the year before the move to several years after it. The tax system does not see one headline number; it sees a sequence of amounts, each becoming taxable on its own trigger date and each carrying its own legal character.

Fixed versus contingent tranches

The first distinction to draw is between amounts that are fixed at closing and amounts that are genuinely contingent. A payment that is certain in amount and merely deferred in time is often treated as part of the disposal consideration from the outset, even if the cash arrives later. A payment that depends on an uncertain future event may be treated differently: it can be valued and taxed at closing as a right, or it can crystallise later when the contingency resolves, depending on the facts and the applicable rules.

This is not a technicality for a founder crossing a border. If a tranche is treated as fixed at closing and closing happens before Spanish tax residence begins, that tranche may sit outside the Spanish resident system regardless of when the cash actually arrives. If instead the tranche is contingent and only becomes taxable when it resolves after arrival, the Spanish residence position at that later date, and the Beckham Regime, become directly relevant. The label on the deal document does not decide this; the legal substance does.

Escrow, holdbacks and seller notes

Escrow and holdback amounts often cause confusion because the founder feels they have not "received" the money, yet the amount may already be part of the agreed sale price. If an escrow simply parks fixed proceeds for a period and releases them absent a claim, the underlying disposal may be complete at closing and the release is largely a cash-flow event. If instead the amount is a true holdback contingent on future outcomes, the analysis is closer to an earn-out. Reading the escrow and indemnity clauses, not the summary table, is what tells you which case you are in.

Seller notes add a further layer. A vendor loan usually splits into two components: the deferred but fixed capital element, which relates back to the disposal, and the interest element, which is separate income arising over the life of the note. For a founder resident in Spain under the Beckham Regime when the interest accrues, that interest has its own source and character and should not be lumped in with the capital gain. For US sellers not relying on Beckham, the same timing problem appears in our separate note on installment sales and seller financing before moving to Spain. Mixing capital and interest is a common way to misstate a return.

Service-linked earn-outs and the compensation risk

The single most important trap in earn-out planning is the earn-out that is really pay for future work. Where additional consideration depends on the founder staying employed, hitting targets, running the acquired business or not competing, tax authorities may recharacterise part or all of it as employment or professional income rather than a capital gain. The economic reality, not the drafting, drives this. A payment that only exists if the founder keeps working looks a great deal like remuneration.

Under the Beckham Regime this character question is decisive. Employment-type income connected to activity carried out while resident in Spain can fall inside the Spanish net and be taxed under the regime's employment rules, which are not the same as the treatment of a foreign-source capital gain. A founder who assumes the whole earn-out is a tax-favoured capital event, and later finds that a service-linked tranche is compensation taxable in Spain, has a very different result from the one they planned. The time to separate genuine sale consideration from disguised remuneration is before signing, when the documents can still reflect the intended economics.

Mapping tranches across the Beckham timeline

The Beckham Regime applies for the year of arrival and the following five tax years, after which ordinary Spanish resident rules generally take over. Deferred consideration frequently runs straight through that boundary. A three-year earn-out signed around the time of a move can produce payments in the pre-arrival year, in early Beckham years and, if it slips, in the first ordinary-resident year. Each of those windows can tax the same type of payment differently.

The practical exercise is to lay one calendar over another. On the first line, put the expected Spanish arrival date, the likely tax-residence year, the Modelo 149 filing window, the last Beckham year and the first ordinary year. On the second line, put every deal date: closing, each escrow release, each holdback resolution, each note instalment and each earn-out measurement and payment date. Where a tranche lands tells you which set of rules is in play; what the tranche is tells you how those rules treat it. A contingent payment that drifts from year five into year seven can move from the Beckham world into the ordinary worldwide-income world.

Source of each payment

Source travels with the character question. A capital gain on shares in a foreign company is a different Spanish item from a gain on shares in a Spanish SL or a company whose value is mainly Spanish real estate. An earn-out for services performed from Spain has a Spanish connection that an earn-out fixed before arrival on a foreign disposal may not. The Beckham Regime does not convert Spanish-source amounts into foreign-source amounts, so a founder cannot assume that living under the regime shelters every tranche.

Founders who set up a Spanish company after the move should be especially careful. If part of the deferred consideration relates to work now being done through a Spanish entity, or to a business now managed from Spain, the source of that value may follow the founder into Spain even though the original sale was of a foreign business. Effective management, permanent establishment and where the value is actually being created should be reviewed before the structure is fixed.

US founders and installment payments

US founders carry a second tax calendar throughout. US citizens and green-card holders are taxed by the United States on worldwide income, so every escrow release, note instalment and earn-out payment is potentially a US item as well as a Spanish one, whatever the Beckham analysis concludes. US installment-sale rules, the treatment of contingent consideration, and the character of service-linked amounts under US law may not line up neatly with the Spanish position, which creates timing and credit questions rather than a single clean answer.

State tax adds another layer. A founder who leaves a high-tax state without properly severing residence can find that deferred payments in later years are still exposed to that state, particularly where an earn-out relates to a business built while the founder lived there. For Americans, the earn-out plan should be coordinated between Spanish and US advisers before signing, so that foreign tax credits, installment reporting and equity-compensation rules are aligned rather than reconciled after the fact under two separate filing deadlines.

A deferred-consideration checklist

Before signing, build a single schedule listing every tranche of consideration, with a column for its amount or formula, whether it is fixed or contingent, the trigger and expected payment date, whether it depends on future services, the entity and country it relates to, and the likely Spanish tax window it will fall into. Add a US column if the founder is American. The aim is not to force any particular structure, but to make sure no tranche is a surprise.

The value of the exercise is that it turns a vague sense of "money coming in over a few years" into a mapped set of tax events. Some tranches may be better fixed before arrival; some may be genuinely and legitimately outside the Spanish net inside the Beckham window; some service-linked amounts may simply be taxable income wherever they fall. Knowing which is which before the documents are signed is the difference between planning and explanation.

Frequently asked questions

General information, not legal or tax advice. Sources reviewed July 2026: Article 93 of Law 35/2006 on the special regime for displaced workers, professionals, entrepreneurs and investors; Law 28/2022; AEAT guidance on Modelo 149 and Modelo 151; AEAT guidance on non-resident-style taxation, Spanish-source income and savings income. Deferred-consideration and earn-out structures are fact-specific and should be reviewed before relocation and before signing transaction documents.