Spain defends Beckham Law against 'tax trap' claims

Spain’s tax agency has vehemently rejected allegations from a UK-US law firm, asserting that the Beckham Law constitutes a “tax trap” that unfairly exploits foreigners relocating to the country. The law firm, led by American-Canadian Robert Amsterdam, has faced significant backlash for what Spanish authorities deem “defamatory” accusations.

In recent months, the Spanish tax agency has been the subject of scathing paid advertisements in prominent newspapers across the United Kingdom and the United States. A full-page ad in The Financial Times boldly warned, "WARNING: Spanish pickpockets operating in this area," alongside a plaque labeled “SPANISH TAX OFFICE: EXPLOIT, PROFITEER, DISCRIMINATE.” Similarly, The Wall Street Journal featured an eye-catching message stating, "Time won't be the only thing you waste when you move to Spain," accompanied by an image of a crumpled dollar bill. These ads urged those allegedly exploited by the Beckham Law to seek assistance from Amsterdam’s firm.

The Beckham Law, enacted in 2004, was designed to attract foreign talent by offering fiscal incentives. It gained its name from footballer David Beckham, who was among the first beneficiaries when he moved to Spain to play for Real Madrid. However, Amsterdam contends that Spanish authorities have now distorted its intent, claiming high-earning foreign workers are facing unwarranted scrutiny from the tax office.

In response to Amsterdam’s accusations, Spain’s Hacienda tax office has taken several months to formulate its defense. On May 6, Amsterdam held a press conference in Madrid titled "Hacienda vs The People: An initial report on Spain and the Beckham Law." The Spanish tax agency countered that of nearly 37,000 taxpayers utilizing the Beckham Law, only a mere 0.5 percent have undergone scrutiny for potential non-compliance.

Under the Beckham Law, individuals and their families who establish tax residency in Spain can benefit from reduced tax rates for a period of six years. Specifically, they pay a lower tax rate on the first €600,000 of income compared to standard personal income tax rates. Unlike regular taxpayers, those under this regime are not taxed on their overseas income, except for employment earnings.

The tax agency maintains that its evaluation criteria for the Beckham Law have remained consistent, even amid legislative amendments. Reports from El Diario, a partner of The Guardian, indicate that of the inspections conducted on the 200 foreigners, approximately 70 percent resulted in compliance, while only 30 percent led to disputes.

Sources close to the situation suggest that Amsterdam’s campaign may stem from ongoing litigation involving a British client against the Spanish treasury. Investigations by Spain’s tax agency have uncovered instances where taxpayers have attempted to circumvent the Beckham Law by establishing fictitious companies in Spain, which then hire individuals to provide services to foreign entities, thereby avoiding taxes in both jurisdictions.

In light of these developments, Spain continues to defend the integrity of the Beckham Law, emphasizing its role in fostering economic growth and attracting talent to the nation.