The Beckham Law: Barcelona’s enduring financial allure for football players

Since the beginning of the current transfer season, we have seen a number of Chelsea-linked players (appear to) indicate a preference for Barcelona, despite the reported turmoil within that establishment, and their great difficulty to spend money and sign players. The most notorious example of this is Raphinha, who stalled negotiations with Chelsea in order to give Barcelona time to pony up some dough to push through his transfer. Jules Koundé might be doing the same.

Why are players, allegedly at least, preferring a move to Spain over England? The obvious responses may be weather, food, culture, and history of Barcelona but I believe the answer might actually be a lot cruder than that: TAXES.

Players, at the end of the day, are workers just like the rest of us, and are subject to paying taxes to their respective governments. Everyone is motivated to keep as much of their income as possible, through legitimate (or illegitimate) means. The impact of tax law determines many individuals’ decisions to move to a city or not. You see this factor into the decision-making of players in the NFL when choosing their contract. Teams that play in US states with no income tax (Florida, Texas, Tennessee, Washington, and Nevada) have an advantage in wooing players who wish to save more of their income.

So, why Spain over England? According to Balcells Group and Delcanto Chambers (private immigration law offices), the “Beckham Law” is a special tax regime that allows foreigners to pay much less taxes than Spanish residents. Foreigners traveling to Spain may pay a flat fee of 24% on up to 600,000 euros rather than the progressive tax rates applicable to Spanish residents. If taxed as a resident, the expat would be subject to a progressive tax scale up to 43% depending on their level of their worldwide incomes. The motivation for the tax benefit was to allegedly attract talent and qualified workers into Spain. It got its name because David Beckham was the first one to take advantage of it. The tax break is good for 6 years (easily within time frame of any player at any club).

Photo by Dusko Despotovic/Corbis via Getty Images

What, then, is the tax situation over in United Kingdom where our beloved Blues play? According to PayFit, The 20% tax rate is referred to as the “basic rate” and employees earning up to £50,270 a year are taxed at this rate. Money earned above this amount is taxed at 40% (refereed to as the “higher rate”). There is a third tax bracket, which is referred to as the “additional rate”. Any earnings above £150,000 are taxed at 45%.

Payfit provides an example to flesh out what this means: A £60,000 weekly salary equates to just over £3.12 million annually. Anyone earning that amount of money would not be entitled to a Personal Allowance. From the £3.12 million annual salary, £37,700 would be taxed at 20%, and £112,300 would be taxed at 40%. The remaining £2.97 million would be taxed at 45%.

The allure of Spain may include wonderful food, culture, history, and people but I believe a major reason players have eyes for Spain has more to do with what they get to keep in their pockets. Otherwise, if they want to win trophies they know not to look further than SW6!

Photo by PAUL ELLIS/AFP via Getty Images