How a repeal of law by Italian Government is strongly penalizing Ferrari in F1. The Italian government has decided to revoke a law, a move which is strongly penalizing Ferrari in F1.

The Italian government has decided to revoke a law starting from January 1, 2024. Could this decision harm Ferrari? Let’s find out together.

The law
The law in question, in force since 2019, is the Growth Decree. It was established to encourage the arrival in Italy of workers residing abroad through a facilitated tax regime.

In recent years, many non-Italian football players have taken advantage of this provision, and Italian football clubs have also benefited. Informally known as the “Beckham Law,” this legislation earned its moniker due to its resemblance to a comparable rule implemented in Spain, where David Beckham was among the early beneficiaries upon his move to Real Madrid in 2003. In Spain, foreign individuals experienced even more significant tax reductions, with English players being subject to a mere 24% tax rate.

Foreign footballers did not have to pay taxes on the first 50% of their income, so the club could pay the player less, and the player still retained the desired net income. Therefore, many clubs and players welcomed this law with open arms as it benefited both parties. The new government, which came to power in the fall of 2022, believed that the law had not brought any tangible benefits to the country, so it was abolished at the beginning of 2024.

A blow for Ferrari?
This could be a headache for Ferrari, which is about to hire new engineers for its F1 team in Maranello, but many of these professionals work abroad.

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Much of the staff that the Scuderia hoped to hire from other nations, or rather, lure away from other teams, resides primarily in the United Kingdom and can no longer benefit from the tax breaks.

Ferrari loses, therefore, an interesting tool to convince foreign employees to move to Maranello, considering that most workers prefer to stay in England for family reasons. In short, if Ferrari can no longer guarantee a favorable tax regime, it becomes increasingly challenging to recruit new engineers. We will see how the team adapts to this legislation and how much it will impact, but the feeling is that it has complicated Ferrari’s negotiations with potential new hires.