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- British Millionaires' Tax Driving Away Soccer Players
British Millionaires' Tax Driving Away Soccer Players
In April, the United Kingdom raised its top income tax rate from 40% to 50%, imposed on amounts over £150,000 (approximately $245,000), jumping past Italy, Germany, Spain, and France. At the same time, Spain has cut their top tax rate on "foreign executives" to 24%, leading to a flurry of well-known Britons reclassifying themselves as Spanish executives.
- [N]ot only did [Spain] create a massive loophole, they backdated it to 2003, which was, coincidentally, the year David Beckham left Manchester United to join Real Madrid.
- Beckham became the first man in Spain to acquire "foreign executive" status; the tax break came to be known as "the Beckham Law."
- And it has become an almost insurmountable advantage for Spanish soccer teams.
- Deloitte Sports Business Group estimates that between the falling pound, the higher British tax rate, and the Spanish tax break, U.K. clubs would have to pay 70 percent more in order to match a player's take-home pay in Spain.
Countries and states should always keep other jurisdictions in mind when setting tax rates. If you raise the rates to an uncompetitive level, don't be surprised if you become uncompetitive.
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About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.