How Spain became a ‘tax trap’ for Brits: Dozens of expats say their ‘lives have been ruined’ with properties seized by ‘pickpocket’ Spanish authorities after being lured to life in the sun with ‘Beckham law’ tax breaks

More than 17 million of us choose Spain for our holidays each year. But for some, the allure of sunshine, good food and a cheaper cost of living is too enticing to be squashed into a week-long getaway.

There are some 350,000 Brits officially registered as living in the country, with north of 12,000 settling permanently with their own property each year. 

Despite the government’s pledges to levy holiday homes and prioritise nationals, Spain remains one of the most popular destinations for British expats in the world.

But dozens of people leaving the British Isles for a place in the sun now claim that they are being ‘fleeced’ out of hundreds of millions of pounds after being ‘lured’ to the country with the promise of favourable terms, one international law firm claims.

Robert Amsterdam, the founding partner of Amsterdam & Partners LLP, says Spain has become a ‘tax trap’ for foreign residents, with many feeling their ‘lives have been ruined’ by ‘relentless tax probes’ he says are inconsistent with European law.

Amsterdam says that as many as 80 expats – including Brits, Europeans and Americans – have been in touch fearing that they face financial ‘ruin’ after Spain ‘reneged’ on its offer of low taxes for wealthy arrivals.

Families have faced attempted asset seizures of their properties, unprompted and unexplained audits and ‘onerous, expensive, and confusing compliance requirements,’ according to the legal expert.

Central to the issue is a tax regime named after David Beckham.

The so-called ‘Beckham’s Law’ was enacted in 2004, allows expatriates to benefit from a significant reduction in their income tax rate. 
The introduction of the law coincided with the English midfielder’s move from Manchester United to Real Madrid in 2003.

Spain hoped that a favourable tax system would attract top talent and investment to the country… not just England’s Number 7.
In short, 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.

There are other caveats – like moving for work and having not been a resident in Spain for the five years prior to the move.