The following excerpt is from an article published in the British newspaper, The Telegraph:
The former head of Spain’s tax office has accused officials in the country of “robbery” against British expats.
Ignacio Ruiz-Jarabo said the Spanish Tax Agency (AEAT), which he oversaw from 1998 to 2001, had created a “fiscal hell” that put off international investors.
He told The Telegraph of how wealthy foreigners who moved to the European nation to take advantage of a lucrative tax scheme faced retrospective investigations into their finances.
The tax rules, dubbed the “Beckham law” after Sir David Beckham utilised them during his time at Real Madrid, charge foreign workers a flat 24.75pc tax rate on Spanish-sourced income up to €600,000 (£517,000) per year for six years.
It is far lower than the progressive tax rates of up to 47pc paid by Spaniards. Dividends, interest and capital gains generated outside Spain are generally exempt from tax under the regime.
But users of the scheme who have high incomes risk being caught up in tax audits that target the wealthy in Spain, Mr Ruiz-Jarabo said.
“There isn’t a special focus on foreigners, [but] there is more of a focus on high earners and business people because they are bound to have more assets.
“Many of the people who have been certified have a few years later received a tax inspection denying their [tax] position as expatriates. This situation produces legal insecurity.”
He said he knew of cases where the authorities targeted foreigners with financial audits, regardless of their status under the tax scheme.
“This is robbery to expatriates that have been unfortunate enough to be on the receiving end of these inspections.”
He claimed as a result, foreigners and native Spanish taxpayers are threatened with huge tax bills and fines as much as three times the size of alleged unpaid taxes.