In recent months, the Spanish Tax Agency has been vilified in paid advertisements taken out in renowned newspapers in both the United Kingdom and the United States.
In The Financial Times a full-page ad stated "WARNING: Spanish pickpockets operating in this area" on top of a plaque labelled “SPANISH TAX OFFICE: EXPLOIT, PROFITEER, DISCRIMINATE”.
Stateside, the giant message in The Wall Street Journal was “Time won't be the only thing you waste when you move to Spain” with an image of a crumpled up dollar bill.
In both cases, the call to action was “if you’re being exploited by the Beckham Law”, “you’re not alone”, “you have rights”, “get in touch with us”.
Similar ads and interview-based articles have appeared in other foreign publications, from the Daily Mail and the Daily Express, to the Irish Times and Switzerland's Le Temps and Berner Zeitung. They have even set up a website called spanishtaxpickpockets.com.
The lawyer and law firm behind the eye-catching accusations is American-Canadian Robert Amsterdam, of Amsterdam & Partners LLP, which has offices in London and Washington DC.
READ MORE: London law firm challenges Spain's 'tax trap' Beckham Law
Writing in Sears, Robert Amsterdam argued that the Spanish authorities have "cynically weaponised a tax law whose original purpose was to attract foreign wealth" and that "high-earning foreign employees are now caught in the crosshairs of a systematic assault by the Spanish revenue authority."
Amsterdam, who regularly writes in leading publications, was referring to The Beckham Law, which was first introduced in 2004 to attract talent and highly qualified workers to Spain with fiscal incentives. It was nicknamed after the footballer David Beckham as he was the first one to take advantage of it when he moved here to play for Real Madrid.
READ ALSO: What foreigners in Spain should know about the 'Beckham Law' tax regime
It’s taken several months for Spain’s Hacienda tax office to respond to Amsterdam’s "slanderous" accusations, no doubt because on Tuesday May 6th the international lawyer held a press conference in Madrid under the title "Hacienda vs The People: An initial report on Spain and the Beckham Law" (see here).
Spanish tax authorities' counterargument is that over the last decade, nearly 37,000 taxpayers in Spain have opted for the Beckham Law tax regime, of which only 0.5 percent (less than 200 in total) have been subject to an inspection for possible non-compliance.
The Beckham Law allows individuals and their family who acquire tax residency in Spain as a result of their relocation to the Spanish territory to pay Non-Resident Income Tax (IRNR in Spanish) in the tax period in which they acquire tax residency in Spain and the following five years.
READ MORE: What you need to know about non-resident tax in Spain
During this period, their tax rate in Spain on the first €600,000 of income will be lower than the rate applicable to personal income tax (IRPF in Spanish).
Furthermore, unlike personal income taxpayers who pay taxes in Spain on their entire worldwide income, under this so-called special regime they don't pay taxes in Spain on income from overseas, except for employment income.
According to Spain’s Tax Agency, the criteria or goodwill when verifying the correct application of the Beckham Law regime has never changed, even after amendments were made to it.
According to data obtained by Spanish left-leaning daily El Diario, a partner of The Guardian, of the completed inspections of the 200 foreigners who were subjected to inspection, 70 percent were resolved with a report of agreement or compliance, and only 30 percent were the subject of a complaint or appeal.
Sources with knowledge of the matter told El Diario that the real reasons for Amsterdam’s campaign are related to a British client who is currently in litigation with the Spanish treasury.
In audits carried out by Spain’s tax agency, cases have been detected in which the taxpayer goes against Beckham Law requirements by creating an artificial company in Spain without resources, which hires the person in question for work and then provides services to the foreign company, which actually carries out the activity.
There are also allegedly more serious cases, where a fictitious company is directly created in Spain to apply the Beckham Law precisely the year in which a very large capital gain is received from abroad. The intention is not to pay tax in Spain since that capital gain originates abroad, but also not to pay tax in the other country either as the company is not a resident of that other state.
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