British expats are being terrorised by corrupt Spanish tax collectors and left fearing financial ruin, an expert lawyer has warned, estimating that dozens of people have been ‘fleeced’ out of hundreds of millions of pounds in recent years.
Robert Amsterdam, of Amsterdam & Partners LLP, told MailOnline that residents had come to him in tears, having been threatened with criminal prosecution after discovering that the tax deal they moved for had suddenly been moved out of reach.
Mr Amsterdam is an international lawyer, specialising in political cases and human rights.
‘I fought the Russians in Russia, representing political opponents,’ he said. ‘But this is what I expect from Vladimir Putin, not what I expect from [Spanish prime minister, Pedro] Sanchez’.
Since picking up the case, he said he has been inundated with harrowing accounts of expats, having moved to the country on the understanding that they would benefit from a certain tax regime, seeing their lives turned upside-down when their status was revoked.
‘We have an elderly couple with a husband [who] had a heart attack as a result of persecution from the tax authorities… I have people telling me that the minute the the auditor gets angry, they threaten them with criminal prosecution.
‘I have people whose bank [accounts] have closed because they got a letter from the Spanish tax authority.’
Central to the issue is a tax regime named after David Beckham.
A French gendarme (L) and a Spanish civil guard patrol together along the beach in the Magaluf holiday resort in Calvia, on the Balearic island of Mallorca, on August 18, 2022
Beckham’s Law was an initiative devised in the early 2000s with the aim of bringing top talent to Spain.
Coinciding with David Beckham’s transfer to Real Madrid in 2003, the 2004 law would allow expatriates to benefit from a significant reduction in their income tax rate.
Through the policy, foreign residents could benefit from paying just 24 per cent on their Spanish-sourced income as tax, up to a limit of €600,000.
This could be significantly lower than the progressive tax rates for everyone else, which go up to 45 per cent.
But Spain has gradually ‘pared back its tax breaks and instituted relentless tax probes into individuals who benefited from the initial scheme’, Mr Amsterdam said.
‘We have heard from many victims in Spain who say that they have had their Beckham Law status withdrawn without explanation and then have been retroactively charged with back taxes to said periods, which is completely outside the semblance of rule of law.’
While the country has taken steps to reform the law and clarify who can still benefit from it 20 years on, Mr Amsterdam warns that the changes have only made matters worse.
He told MailOnline: ‘They seem to have decided when they reformed it that they were really going to hardball everybody who had already taken advantage of [Beckham’s Law]. So I think the actual attack on foreigners accelerated after reform.’
‘I think the conditions were more stringent,’ he explained. The Spanish authorities, he believes, ‘decided that it would be more efficacious to go after people involved in the older Beckham as opposed to the newer Beckham.
‘I think that’s what motivated it – and the statute the limitations was running out on some of the older Beckham applicants.’
The result has been a disaster for British residents settling in the country.
File photo, homes in Cala Fornells on Mallorca island. Via Beckham’s Law, foreign residents could benefit from paying just 24 per cent on their Spanish-sourced income as tax
Mr Amsterdam says that as many as 80 expats – including Brits, Europeans and Americans – have been in touch fearing that they face financial ‘ruin’ after having their tax status ‘relentlessly probed’ by the authorities.
He surmises that the root of the problem lies in corrupt tax incentives.
‘There’s a mixture of things. There’s firstly a relentless level of corruption… The tax inspectors operate on a bonus system tied to their assessment so they’re in this to win.
‘Their personal financial benefit resides on your misery.’
As a result, many who move to Spain expecting to pay 24 per cent tax on their local income suddenly find themselves re-evaluated and left with a bill for up to 45 per cent.
A resident who paid €120,000 in tax on a local salary of €500,000 might, then, discover that they suddenly owe an additional €125,000.
As it stands, the checks and balances in place to appeal such decisions are found to be lacking.
‘Actually getting to court to vindicate your rights can take eight to ten years, so most people give in to what is effectively extortion because they know it’s going to be a goddamn decade before they get their justice received,’ Mr Amsterdam explained.
Quality data on the demographics moving to Spain from Britain is scarce. But a 2017 study from the ONS revealed more than 40 per cent of British expats to the country were aged 65 and over.
This figure was found to have more than doubled since 2006.
The question, Mr Amsterdam asks, is: ‘If you’re in your 60s do you really want to spend your 60s with all of your assets tied up?’
File photo. Many who move to Spain expecting to pay 24 per cent tax on their local income suddenly find themselves re-evaluated and left with a bill for up to 45 per cent
He said the sprawling Spanish tax system ‘seems structured to extort the maximum amount from unsuspecting foreigners’.
Jose M. Lopez-Avalos, a solicitor at Malaga Solicitors, agreed that many people are ‘suffering’ the Spanish Inland Revenue service.
‘This situation is not because of discrimination [against Brits] but because of the voracity of tax man who is looking for money from everybody,’ he told MailOnline.
‘The situation of expats and non-residents is more complicated because of several reasons:
‘Firstly, Lack of knowledge of Spanish Tax Laws and regulations. Sometimes they do not pay correct taxes for ignorance, not because they wish to commit fraud.
‘Secondly, Lack of digital certificates,’ where people ‘do not receive formal official notifications correctly’.
‘Because of these circumstances, tax amounts not paid are increased dramatically with interests, penalties, etc, so at the end of the day people have to paid too much money by surprise!’
Mr Lopez-Avalos described the ‘fight’ against the tax authorities as being ‘like David against Goliath’ in any case – ‘and if you have the handicap of being a non-resident or expat…even more complicated’.
Malaga Solicitors has been helping expat property investors in Malaga for over 25 years.
Legal expert Robert Amsterdam has been inundated with harrowing accounts of expats, having moved to the country on the understanding that they would benefit from a certain tax regime, seeing their lives turned upside-down when their status was revoked. File photo.
León Fernando del Canto, a tax lawyer and founder of Del Canto Chambers, echoed the concerns, telling The Telegraph previously that they had seen instances where the tax office contested the status of people even ‘after two or three years in the country’.
He said this has ‘upset a lot of people and created insecurity’, as people no longer know how much of their income stands to be taxed.
Without adequate reform, uncertainty stands to deter talent from moving the country – the very reason the ‘Ley Beckham’ was set up in the first place.
It comes at a precarious time, with foreigners driving nearly 20 per cent of all housing transactions, a 30.7 per cent increase from 2019 levels.
This, in turn, helps prop up a strong construction industry, valued at $192.38bn last year and projected to be worth $229.91 billion by 2030, per Mordor Intelligence.
Uncertainty and perceived arbitrariness strike fear into the hearts of individuals, and have already brought lives to ruin, legal experts claim.
But on top of this, a more deeply-rooted bureaucratic problems suggests widening structural issues within Spain’s challenged economy.
