The Tax Agency defends its inspectors against a "defamatory" campaign over the Beckham Law.
The application of the so-called Beckham Law, from which 37,000 foreign taxpayers have already benefited, has sparked a conflict between a law firm with offices in the United Kingdom and the United States, Amsterdam & Partners LLP, and the Spanish Tax Agency (AEAT). The law firm believes that "the Treasury is abusing its power and acting outside the rule of law." To counter this, it has launched a powerful campaign that includes the creation of a dedicated website—"Spanish Tax Pickpockets," the title translated from English—paid advertisements in the Financial Times and The Wall Street Journal, and a press conference today in Madrid to present its complaints. The Tax Agency wanted to respond and, in an unusual initiative, has come out in defense of its inspectors and the correct application of tax regulations regarding inspections and audits.
The AEAT believes the Anglo-Saxon law firm's campaign damages the image of the tax authority and, therefore, of Spain. They also accuse its promoters of making statements with a "defamatory effect." The firm's founding partner, Robert Amsterdam, has even stated that the Tax Agency behaves "outside the law," and the website states that inspectors are engaged in "aggressively pursuing cases and pressuring victims to accept disproportionate settlements."
What is the Beckham Law?The so-called Beckham Law is a special tax regime for workers posted to Spanish territory and their families, and is regulated in Article 93 of the Personal Income Tax Law. The regulation allows individuals who acquire tax residency in Spain as a result of their relocation to Spanish territory, as well as their immediate family, to pay Non-Resident Income Tax in the tax period in which they acquire tax residency in Spain and the following five. It is typically used by athletes (hence its name), singers, or high-income workers.
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The advantage offered by the Beckham Law is that, during the period covered, the taxation in Spain on the first €600,000 of income will be lower than that applicable to Personal Income Tax (IRPF). Furthermore, unlike a Personal Income Tax taxpayer—who pays taxes in Spain on all their worldwide income—under this special regime, they will not pay taxes in Spain on income earned abroad, with the exception of employment income.
The Government changed the lawThe current government modified the regulation, effective 2023, to accommodate new groups, such as remote workers, entrepreneurs, and qualified professionals, as well as those engaged in training, research, development, and innovation activities, and to extend its application to members of taxpayers' families.
Sources at the Tax Agency maintain that the inspectors' work focuses on "verifying the correct application of the special regime" and not on persecuting beneficiaries. This "inspection analysis" advocated by the tax authority is classified as normal in the routine work of the agency's professionals.
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The same sources refute one of the accusations made by the law firm Amsterdam & Partners LLP, which argues that those inspected must "pay in order to appeal." The Tax Agency argues that "the taxpayer can guarantee and suspend the debt and then, if they deem it appropriate, resort to litigation." It adds: "There is no difference in this between foreign and domestic taxpayers."
How many checks have been carried out?In the last decade, according to official data from the Tax Agency, of the 37,000 taxpayers who have opted for this special tax regime, approximately 185 (0.5%) have been subject to inspections. In other words, the tax authority denies the existence of "special inspection attention due to the application of this tax regime, compared to other areas of activity" or "a particular litigation related to these inspections," as Amsterdam & Partners LLP claims.
Another official figure is that 70% of the audits initiated by the Tax Inspectorate have been resolved with a report of agreement or compliance. Therefore, 30%, or about 55, have been the subject of a claim or appeal.
Some 55 audits initiated by the Tax Agency have been the subject of claims or appeals.The Tax Agency also sought to clarify the procedure for accessing the special Beckham Law regime. Sources at the Tax Agency (AEAT) clarify that the applicant submits documentation, and if the inspection finds, for example, "that the documents submitted falsify the reality of the case (for example, that the employment contract is artificial), the corresponding tax adjustment is logically carried out."
Some checks by the inspectorsOver the last decade, the Tax Agency (AEAT) has identified several problems in the application of the Beckham Law. In the inspections carried out by inspectors, for example, they have detected cases in which the taxpayer creates a company in Spain without resources that hires them for work and then provides services to the foreign company that actually carries out the activity. In other words, the taxpayer artificially creates an employment contract in Spain. This case would be subject to tax regularization.
Inspectors have also detected the creation of shell companies in Spain to apply the special regime in the exact year in which a large capital gain is received from abroad. The goal is to avoid paying taxes in Spain or in the country of origin. Shell companies are other cases under investigation.
Do inspectors receive commissions?The Anglo-Saxon law firm also alleges that tax inspectors receive commissions or percentages for the adjustments they perform on taxpayers. The Tax Agency denies this and asserts that "there is no direct relationship between the productivity bonus they receive and the results of any specific case."
The Agency's data is as follows: "Of every 100 euros of a civil servant's overall salary, barely 1.4 euros depend on the quantitative results of their overall inspection activity (never on a specific case), including any spillover effects." It adds: "Even this small percentage will be determined by the results achieved by many other civil servants who will be carrying out inspections of a very diverse nature."
The tax authority recalls that the OECD's 2024 report on tax administrations indicated that three-quarters of the 160 countries analyzed have tax administrations with objective-based variable remuneration systems, including Spain.
Presentation of the report 'Treasury versus the People'Following the publication of several advertisements in newspapers in the United Kingdom and the United States, the Tax Agency sent a letter to the law firm Amsterdam & Partners LLP expressing "its profound rejection of the substance and form" of the campaign. This Tuesday, its leaders will hold a press conference in Madrid to present a report entitled "The Treasury against the People."
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