The following is a translation of an article published in La Razón.
The British law firm Amsterdam & Partners LLP, led by its founder Robert Amsterdam, accuses the Treasury of believing itself above the law and announces that it will report Spain to the UN and send a 40-page complaint to the OECD next week : “All of Spain’s double taxation treaty violations will be exposed, and there should be no presumption of regularity,” says Robert Amsterdam. This is his response to the letter sent this week by the director of the Tax Agency, Soledad Fernández, to the agency’s staff, in which she refuses to schedule a meeting with the firm and answer their questions.
The firm, which presented a study entitled “Hacienda vs. the People: Spain and the Beckham Law” on May 6, accuses the Treasury of committing tax harassment and violating the rule of law against foreigners who moved to Spain under the “Beckham Law” tax incentive program, which has become a tax trap. The persecution, the firm alleges, is motivated by the government’s voracious tax collection. In contrast, the Treasury maintains that during the last decade only 0.05% (185 cases) of the 37,000 people covered by the “Beckham Law” have been investigated. Of the completed inspections, 70% resulted in a settlement or were accepted; only 30% have been challenged or appealed.
The firm dismisses these figures and asserts that the Treasury has created a “regime of terror.” “It conducts its investigations in bad faith,” it asserts. This is demonstrated by “the way it denies the presumption of innocence of taxpayers, the way it compensates its inspectors, the way it uses administrative courts, the way it uses tax investigations as political punishment, and the way it uses the concept of simulation.” “They use a section of the law to pursue fraud before it is committed,” Robert Amsterdam complains. Simulation means that if the inspector doesn’t understand your accounts, they are assumed to be incorrect.
For all these reasons, it is preparing legal action in several jurisdictions, including the Spanish Constitutional Court, the Court of Justice of the European Union in Luxembourg, and the European Court of Human Rights in Strasbourg. It will also file a complaint against the Treasury before the United Nations (UN) for violating taxpayers’ human rights and will file a complaint with the Organization for Economic Cooperation and Development (OECD) regarding the persecution of people benefiting from the “Beckham Law.”
This is the firm’s response to the Treasury’s letter. Soledad Fernández, director of the Tax Agency, wrote to the staff to explain that, following the firm’s initial announcement in a foreign media outlet at the end of last year, she sent a letter to the firm expressing her opposition and requesting a correction, but received no satisfactory response.
The director explained that, following her initial contact, the firm sent her four letters urging her to “answer a long list of questions, demanding a meeting and ignoring any explanations.” Fernández justified her decision not to respond to these requests by stating that ” I have not answered the questions nor have I agreed to schedule the meeting, certain that it would serve no purpose other than to continue defaming us and contributing to giving them greater importance than they really deserve.”
“This letter is an example of an organization that has no right to operate in a free and democratic society,” the lawyer responds to this letter, which he describes as “ridiculous.” “If you want to look for fraud, look to the Treasury; they are the fraud of the system,” he asserts. “When a public authority is afraid to answer questions, we know they are hiding things like bonuses ,” he adds.
Regarding these bonuses, the firm alleges that inspectors receive financial incentives through a €1.2 billion bonus scheme that rewards additional tax collection and would be scandalous if used, for example, by the police based on their number of arrests. This bonus system also rewards the speed with which an inspection is completed and the closing of cases with an agreement between the inspector and the taxpayer, which can lead to coercion, the firm asserts. The report also indicates that the threat of criminal proceedings is a resource used against some taxpayers to force them to yield to their demands.
For the firm, the bonus system is completely corrupt: “No country with a solid democracy would accept bonuses or incentives for its civil servants.” ” 75% of OECD countries do not have a bonus plan similar to the Treasury, because it is notoriously corrupt ,” Amsterdam insists. In his opinion, they are forced to act like predators against their fellow citizens. The lawyer states bluntly that “no other country acts so ruthlessly, not even North Korea.” Therefore, he demands that it must stop discriminating and adapt the concept of proportionality, as the EU has requested. “Our job is to eliminate the asymmetry of power and provide some remedy for the systemic human rights violations perpetrated by the Spanish government. This is a very severe violation,” he denounces.
In the midst of a press conference held by Amsterdam & Partners, the State Tax Inspectors (IHE) issued a statement accusing the firm of lying, endorsing the letter from the director of the Tax Agency, and criticizing it for allegedly seeking fame. “We always have the firm resolve to carry out our work inspired by the highest standards. […] We neither accept nor tolerate the insults, contempt, and, above all, the discrediting that we are experiencing in these times, through statements that seriously defy the truth ,” the inspectors state in the statement.
“It is intolerable that a few, seeking fame and publicity they would otherwise never achieve, target this institution, which belongs to all Spaniards, to insult it. The AEAT, with room for improvement, is the institution most highly valued by all Spaniards and the one they trust to help them comply with the tax system; it enjoys a prestige and an image that is recognized both within and outside our borders,” the inspectors added. “I understand why they are upset, and I suggest they take a pill because it’s getting out of hand. I’m not at all interested in fame; I’m here seeking justice ,” responded Robert Amsterdam. The firm’s founder declared his support for tax inspectors, who should be paid a decent salary to do their work, but denied that they can be incentivized to do so.
“Beckham Law”, criticisms and reforms
The “Beckham Law,” also known as the “Expatriate Law,” is a special tax regime in Spain introduced in 2003 to attract foreign talent, including professional soccer players. In fact, its name became popular because one of the first beneficiaries was soccer player David Beckham, who signed for Real Madrid. This regime allows taxpayers to pay a fixed amount of personal income tax on income generated within the country, rather than on their worldwide income.
This regime is regulated by Article 93 of the Income Tax Law and allows foreign workers posted to Spain who reside for more than 183 days to pay tax only on income generated within the country, rather than on their worldwide income (as any normal tax resident does). It also allows for taxation at a flat rate of 24% up to €600,000 and 47% thereafter, instead of the progressive personal income tax rates. Meanwhile, savings income is subject to a tax scale ranging from 19% to 28%. This special regime can be applied for six years.
The law was widely criticized for being unfair to Spanish residents. Therefore, in 2010, the regime was reformed to limit taxation to 24% up to €600,000. In 2015, the “Beckham Law” was reformed again to exclude professional athletes from this regime. On January 1, 2023, the Start-Up Law came into force, reducing the required period of prior residence outside of Spain from 10 to 5 years.