How Spain’s “Becklam Law” Has Turned into an Exploitative Tax Trap
Robert Amsterdam has published an opinion article in Spears examining the deceptive tax practices by the Spanish revenue authority which attracts foreign earners to relocate and then assaults them with waves of unfair audits and massive erroneous tax claims. Below an excerpt:
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.
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.
