Ben Pawlowski
THE founding partner of a top international law firm has slammed Spain’s ‘heartless’ tax agency as ‘out of control’ amid allegations that the authority is discriminating against wealthy expats.
Robert Amsterdam’s comments come after his firm Amsterdam and Partners LLP published a damning white paper entitled Hacienda vs. the People: an initial report on Spain and the Beckham Law, the latest step in a scathing campaign called ‘Spanish Tax Pickpockets’.
The hundred-plus-page report, unveiled at a press conference in Madrid on Tuesday, accuses Spain’s tax agency – known as the Hacienda – of ‘systemic, grievous and ongoing violations of the rule of law’ in relation to application of the Beckham Law.
Named after footballer David Beckham following his move to Real Madrid in 2003, the tax break has helped to encourage tens of thousands of successful foreigners to move to Spanish shores.
Under the legislation introduced in 2005, qualifying foreign workers pay a flat 24.75% tax rate on Spanish income up to €600,000 – significantly lower than the progressive rates of up to 47% paid by Spanish nationals.
However, many expats now say they are having their tax status reassessed after years of living in Spain, which, according to Amsterdam & Partners, is ‘completely inconsistent’ with European law.
Over one hundred expats have contacted the international law firm to share their experiences of ‘unfair audits, investigations, and onerous financial claims made by the Spanish revenue authorities without foundation’.
Ahead of the launch of the white paper earlier this week, the Hacienda finally broke their silence. Quoting statistics which critics claim are ‘unsubstantiated’ and ‘difficult to reconcile with experience’, the revenue authority said that just 0.5% of the beneficiaries of the Beckham Law had been investigated, of whom under one-third (roughly 55) had lodged a complaint or appeal.
Mr Amsterdam spoke to the Olive Press following the publication of his white report, co-authored alongside Christopher Wales, a former advisor on tax policy to British prime ministers Tony Blair and Gordon Brown.
In response to the Spanish tax authority’s riposte, Mr Amsterdam claimed the numbers ‘made no sense’ and accused the Hacienda of ‘living in an alternative reality’.
READ MORE: Beckham Law in Spain: The 5 Eligibilty Pathways for Foreign Workers
“If these numbers are to be believed, then almost everybody that has been inspected has called me,” added Mr Amsterdam, whose past clients have included one-time Thai leader Thaksin Shinawatra, Zambia’s former president Rupiah Banda, and Russia’s wealthiest man Mikhail Khodorkovsky.
Central to the issue is the use of a ‘perverse’ new €125 million incentive scheme for revenue staff introduced last month, described as a ‘slap in the face of every taxpayer in Spain’.
Under the scheme, auditors receive bonuses for collecting more income tax and VAT, which critics say gives staff a financial incentive to invent cases and engage in ‘organised, malicious, and hostile action’ against wealthy residents.
The white paper estimates that over €2.1 billion has been offered to staff in bonuses over the past decade.
READ MORE: Spain shuts down ‘golden visa’ scheme – what alternative residency pathways remain?
“The incentive scheme has to be modified or ended immediately,” said Mr Amsterdam.
He added: “They have to reinstate the presumption of innocence, they have to retrain their auditors, and they need to get rid of administrative tribunals that aren’t functioning as courts, but are delaying people’s ability to appeal by years.”
Amsterdam & Partners will begin commencing advances in the near future in cities across southern Spain, including Malaga.
The crackdown is the latest in a swathe of moves designed to target foreign residents.
On April 3, the ‘golden visa’ scheme came to an end, whilst in January Spanish prime minister Pedro Sanchez announced plans for a 100% tax on property purchases by non-EU residents living outside Spain.
