Spanish gov't to end "Beckham" Law

20:48, November 04, 2009      

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The Spanish government has announced that within two months what is known as the "Beckham law" in Spain will no longer exist.

In its budget for 2010 the Government will be ending the law which allows foreigners who earn over 600,000 Euros a year to pay a special tax rate of just 24 percent for five years.

That 24 percent will increase to the 43 percent that a Spaniard earning the same amount of money has to pay in taxes.

The main effect of this will be in football. The law is popularly known as the "Beckham Law" because it was introduced around the time that David Beckham and the other "Galacticos" such as Ronaldo and Luis Figo played for Real Madrid in 2004.

Its main aim was to attract foreign business "high-fliers" to come and work in Spain to stimulate the economy, but a side effect allowed Spanish football clubs a huge advantage in signing foreign star players.

In England for example high earning footballers pay around 50 percent income tax, so a move to Spain paying just 24 percent is clearly more attractive for both players and clubs.

Now that will change as Spanish clubs will have to pay similar levels of taxes as their foreign rivals, significantly increasing expenses.

For example: Cristiano Ronaldo currently takes home 15 million euros a year. With Real Madrid picking up his tax bill that currently costs his club 18.6 million euros a year. However, when taxes are increased in 2010, Real Madrid will have to pay 21.45 million a year.

Given that Real Madrid has recently signed Kaka and Karim Benzema, those signings alone mean an increase of around 9 million euros a year in club expenditure.

The Spanish Football League estimated the total cost to the Spanish game will be around 100 million euros and has threatened strike action over the government's intentions.

Source: Xinhua
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