Abolished Italian 'Beckham Rule' could be disadvantage for Ferrari

As of January 1st, Italy's 'Decreto Crescita' law was lifted. This gave people who came to live and work in Italy from mid-2019 a big tax break.

Many non-Italian soccer players gratefully took advantage of the rule in recent years, and Italian soccer clubs also benefited from the law. Non-Italian soccer players did not have to pay tax on the first 50% of their income, the club could also pay less to the player, but the player still kept the desired net income. Therefore, many clubs and players welcomed the law, as it benefited both parties.

The law was also known abroad as the "Beckham Rule," named after footballer David Beckham. When the famous Briton left Man Utd for Real Madrid, a new law was introduced in Spain beforehand.

This enables people who move to Spain from abroad and start working there to benefit from special tax arrangements, provided they are seen as having extraordinary talent.

Beckham was seen as a person with extraordinary talent who would bring a lot of extra value to the country. Italy's Decreto Crescita law, introduced in mid-2019, was a bit different but was compared to the Beckham law given the great benefit it provided to footballers.

Five years later, the Decreto Crescita law has expired in Italy after a new cabinet came to power in late 2022. They agreed the law did not bring any benefit to the country, causing it to lapse at the beginning of 2024.

This might come as a disappointment for Ferrari, which is in the process of bringing in personnel for their F1 team in Maranello - many of whom work abroad.

The lucrative terms meant that workers who came to live in Italy from abroad from mid-2019 and went to work for an Italian company paid no tax on their first 70 to 90 per-cent of income.

The problem with Ferrari

The engineers that Ferrari hoped to bring in from abroad, or rather, take away from other F1 teams are based mainly in Britain and can no longer benefit from the tax break.

Ferrari loses an interesting advantage for convincing personnel from abroad to make the move to Maranello. It's a setback for the team, which would have taken relatively few personnel away from other teams in recent years. Many engineers do not want to make the move to Italy, finding it too big a change from their lives compared to Britain.

This is compounded by the issue arising through the cost cap, whereby personnel are leaving teams for jobs in other sectors. Teams cannot always offer the competitive salaries that engineers at companies outside F1 can earn, therefore, there are engineers who are saying an early goodbye with an eye on their own careers.

Teams, together with the FIA and F1, are looking at ways to adjust the cost cap. After all, you don't want to lose your best people to another sector outside of motorsport. That was not the idea behind introducing the cost cap and, thus, trying to create a level playing field for the teams.

Incidentally, that level playing field is still not there, as teams based outside Britain have to deal with different tax rules and average salaries in their countries.

There are advantages and disadvantages to that, for both teams based in Britain and outside Britain. One will have to look closely at how to make the costcap as fair as possible, but at the same time, how to keep the industry (financially) competitive across the board.