Clubs get tax benefits for foreign players

A report in the Spanish financial newspaper, Cinco Dias, said the Spanish leagues have a better financial advantage in landing a foreign player than any other league due to tax benefits.

A study by Ernst & Young noted that the so-called Beckham Law, introduced in 2004, helped expatriates with tax matters in Spain. So, Spanish clubs had to pay less in tax to foreign players than leagues in England, Germany, Italy or France.

The law allows expatriates in Spain to opt for assessment under Spanish non-resident income tax (NRIT) rules for a period of up to six tax years.

Since they are not taxed as Spanish residents, this means the expats have their earnings subject to a flat tax rate of 24 percent for Spanish source employment income, instead of the progressive resident tax scale which has rates as high as 43 percent.

The study found that, factoring in the same salary and excluding Spain's low social security costs, a Spanish club paid 29 percent less than English Chelsea in gross salary, 32.5 percent less than Italian Inter Milan and 26 percent less than German Bayern Munich.

Ernst & Young estimated that a EUR 2 million net salary would cost EUR 2.7 million in Spain, but double in France, almost EUR 4 million in Italy, EUR 3.8 million in England and EUR 3.6 million in Germany.

Source: euFootball.BIZ © Copyright 2006 - All rights reserved.