Has the Beckham law helped to attract foreign capital?
Since its promulgation, Spain has joined countries that aim to attract residents of great fortune.
There is currently an international struggle on how to attract residents with great international private fortunes. Spain has taken its time in joining these and the legislation is still lacking in important aspects, however, it is progressing. The UK, France and Germany or more recently, Portugal and Greece, just to mention a few, have been offering for decades, visas, residence permits and tax advantages for foreigners in exchange for them making investments and/or acquiring real estate in their territories.
From 2014 to 2017, Spain has attracted more than 2.000 millions of euros thanks to these initiatives. Data that has shown how our country, despite its delay in the development of these measures, it has finally joined the bandwagon of its European peers and step by step, it has turned into one of the most popularly chosen countries of residence.
Everything began with David Beckham. Not with him, but with his law, or better said, with the law that took its name from the tax reform after his arrival to Real Madrid, in 2003. And, in the midst of galactic maelstroms, was approved in Spain a tax regime that sought to boost the economy and the talent of highly qualified and specialized managers and professionals.
In those years,I worked at an office that advised Beckham in the United Kingdom and the Spanish measure surprised us very pleasantly. We always had the doubt of whether this tax regime would have been approved in the same way if the subject was an Atleti player, but this is another debate.
The Beckham Law offered in 2003 to the impatriates the possibility of paying only for income obtained in Spain and with the reduced rate of non-residents, instead of being taxed as residents by world income and rates close to 45%.
In 2010, this advantageous tax reality suffered cuantative cuts as its application to the salaries that do not exceed 600,000 euros per year. In this way, high level athletes were excluded, which made the signing of international stars more expensive and made Spanish football lose an important element of attraction.
Three years later, in 2013, Spain decided to bet unambiguously by attracting foreign capital and launched the Golden Visa, which offers a residence permit and the possibility of applying for citizenship from an investment of 500,000 euros and having lived in Spain for several years.
After years of continuous declines in the prices of the housing market, real estate investment is an important incentive. But the possibilities of business investment and business opportunities in our country offer the greatest potential. What we need, from our experience working with this type of clients, is a tax legislation that better incentivizes this type of investment, perhaps joining measures to promote employment.
Lastly, and without falling into the hackneyed national topic, Spain also provides the potential foreign investor frankly desirable conditions of life (good weather, rich social life, enclaves of tourist interest, modern communication networks and transportation, and many more), all of the above makes a very attractive combination for great foreign riches.
So, Spain is calling the foreign investors phone with a siren call. One that, paraphrasing the Rolling Stones, does not stop asking: Don’t you want to live with me?
Leon Fernando del Canto is a lawyer in Spain and a Barrister in the UK.