Spain moves to reduce tax breaks for footballers

4th November 2009, Comments 0 comments

The ruling Socialist Party hopes to change the so-called "Beckham law" which allows foreign players earning over EUR 600,000 to reduce their rate to 24 percent instead of the usual 43 percent.

Madrid – Spain's ruling Socialist Party said on Tuesday it had reached an agreement with three smaller parties to remove the so-called "Beckham law" under which foreign footballers receive tax breaks which have been credited with drawing top players to La Liga.

The law, introduced in 2005 as a means to lure foreign executives to Spain, allows foreign players who earn over EUR 600,000 a year to reduce their tax rate to 24 percent instead of the 43 percent applied for Spaniards in the same income bracket.

It became dubbed the "Beckham law" because it was back-dated to 1 July 2003, the day after David Beckham moved to Real Madrid from Manchester United.

"There is an agreement to change the 'Beckham law'," said a spokeswoman for the governing Socialist Party which lacks an absolute majority in parliament and needs the backing of other parties to pass legislation.

The ruling party has the support of the left-wing coalition Izquierda Unida (IU), their Catalan equivalent the Iniciativa per Catalunya/Verds (ICV) and the Galician regional party Bloque Nacionalista Galego (BNG) to change the law.

The four parties together have 176 seats in the 350-seat assembly.

The new law will not apply to recent big-name signings like that of Portugal's Cristiano Ronaldo by Real Madrid or Sweden's Zlatan Ibrahimovic by Barcelona because it will not be applied retroactively and will only relate to contracts signed from 1 January 2010.

The tax break has come under renewed attack at a time when Spain is facing its worst recession in over 50 years which has caused the unemployment rate to hit 18 percent, the highest rate in the European Union.

The president of the Spanish Football Federation, Jose Luis Astiazaran, warned his organisation would take steps to oppose the change in the law and would even consider stopping matches from going ahead as a form of protest.

"If this tax break is eliminated, it will affect football by making the league less interesting, there would be less viewers of matches on pay TV, less interest on the part of sponsors, less crowds in the stadiums and the state would earn less tax income," he told reporters.

AFP / Expatica

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