In 2005, Spain introduced the ‘Beckham Law’, a tax regime designed to attract foreign talent and investment to Spain by allowing individuals relocating there to benefit from significant tax advantages. The law, with its nickname derived from one of its most famous beneficiaries, David Beckham, has since been modified to exclude sportsmen and women and encourage senior executives to Spain’s sunny shores.
The premise was simple: a favourable tax system that exempted global income not earned in Spain for a period of six years, with a flat rate of 24 per cent on Spanish-sourced earnings and gains, and avoided Spain’s painful wealth tax levied in most regions. It seemed like an irresistible offer.
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But what started as a clever initiative to attract high-earning employees now seems like a bait-and-switch of epic proportions. High-earning foreign employees are now caught in the crosshairs of a systematic assault by the Spanish revenue authority, and I have launched a campaign to expose the injustices of the law – in effect a state-sanctioned predation of wealthy expats.
Many families embraced Spain’s offer, but for many of these individuals, la buena vida has turned into a nightmare. Spanish authorities have weaponised the Beckham Law, transforming it into a tool to target foreign income earners disproportionately. The regulatory changes, combined with a wave of ‘shoot first, ask questions later’ audits, come only after people have laid down roots and integrated into communities. Many cannot just pack up and leave on a moment’s notice.
Simultaneously, Spain has increased audits and penalties, portraying expats as exploiting local systems. In 2022 its government altered its wealth tax regime so that non-residents who owned property in Spain through a company became subject to the levy. The language of the law is now so general that there are concerns it could also affect non-residents’ holdings in property investment funds too.
This shift in the authorities’ stance threatens Spain’s ability to attract global talent and capital. In 2023, eligibility criteria of the Beckham Law were updated to allow certain self-employed people and digital nomads to work under the scheme. The intent was to attract start-up talent and investment, but this broadening of eligibility was counter-balanced by increasing numbers of audits and investigations of the pre-2022 foreign residents, a small minority of whom were playing fast and loose with the scheme. Policies once designed to promote entrepreneurship and innovation now come with heavier compliance burdens. When a senior executive is targeted for an audit, he or she must spend time and money on legal representation, tax planning professionals, and a series of other professional services despite, in the majority of cases, having done nothing wrong.
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At the heart of this crisis lies a troubling incentive system. Spanish tax auditors are rewarded with a cut of the sums they recover, whether through court judgments or settlements. This profit motive has led to aggressive audits and inflated assessments of the wealth of high-profile individuals.
As you might have guessed by now, I have become exercised by the behaviour of the Spanish authorities partly because it has had an impact on businesspeople who have become clients of mine. But I’m far from alone. Tax professionals tell me that that authorities have used a variety of tactics to apply pressure when conducting audits, such as carrying out depositions of associated vendors and making premature international information requests. The consensus is that these methods are designed to reach quick settlements, even in cases where the claims might be legally questionable. This would hardly be a surprise; former Liverpool footballer Xabi Alonso was tried and acquitted three separate times on claims of tax fraud.
If this wasn’t enough, Spain is one of the only countries in Europe that demands full payment of assessed taxes before an appeal can be filed. Even if the assessment is blatantly unfair, individuals are often forced to liquidate assets or bear crippling financial burdens simply to access the appeals process. If they decide not to pay up from the outset, they risk being pursued aggressively, with the authorities even scouring other jurisdictions for assets to seize.
This policy undermines the most basic principles of justice, violating rights enshrined in both the EU Charter of Fundamental Rights and the European Convention on Human Rights. Spain’s campaign against Beckham Law beneficiaries is a stark reminder of how easily states can exploit their power to undermine the rights of foreign investors. The solution is not to crack down on those who accepted Spain’s invitation, but to address the underlying corruption and greed within the tax administration itself. Spain’s profit-driven enforcement mechanism must be dismantled, and its pay-to-appeal policy reformed.
Robert Amsterdam is an international lawyer and the founding partner of Amsterdam & Partners LLP
