French tax hike is good news for Paris Saint-Germain but bad news for the rest
PARIS: The prospect of Paris Saint-Germain tightening their grip on French football has been stepped up by the government’s confirmation that the country’s football clubs are liable for the controversial new 75pc ‘super tax’ on players’ salaries in excess of €1m.
President Francois Hollande and his colleagues have rejected suggestions from French Football Federation president Noel Le Graet that sports clubs should be exempt.
Already the FFF is involved in a dispute with Monaco over the principality club’s ability to use the local tax regime advantageously when attracting players.
The fact that PSG’s Qatari owners can afford to meet the upgraded tax demands while other clubs can not opens the door for a widening of the power gap at the top of the French league.
Le Graet had said, in an interview published early this week, that football clubs would “not be affected by the 75pc tax.” Le Graet told Le Parisien newspaper that he had spoken to Prime Minister Jean-Marc Ayrault, who had been “very clear: only big companies will be taxed.”
Le Graet added: “Professional clubs are considered to be small- and medium-sized enterprises. Therefore they will not be affected by the 75pc tax.”
However, French government sources told German news agency DPA: “It (the tax) concerns all companies that pay employees more than €1m a year.”
Controversial
Last December the French league hailed the news that the country’s top constitutional body had rejected plans by the Socialist government to introduce the controversial tax that League president Frederic Thiriez had previously warned could lead to the “death of French football.”
Hollande sees the new tax seen as a means to aid the ailing French economy but the LFP had repeatedly expressed concern that it would lead to a talent drain from France’s top flight.
France’s Constitutional Council ruled the temporary two-year tax rate was unconstitutional because it differed from other forms of income tax through its application to individuals instead of whole households.
However, Hollande last week reworked his proposal meaning that employers, rather than employees, would be liable for the 75pc rate. Many footballers would already be taxed at France’s top marginal rate of 49pc, which takes effect at €500,000 a year.
Bloomberg has reported that the new proposal will now see clubs pay a surcharge to bring the effective tax rate on salaries above €1m to 75pc.
Confused approach
Speaking on France Inter radio on Tuesday, Small Industries Minister Fleur Pellerin said: “The assurance has been given that only salaried workers will be affected. Football clubs are a bit above the revenue that one would use to define a small business. But non-salaried artists and non-salaried athletes won’t be affected.”
The LFP on Friday issued another stinging attack on the 75pc tax plan stating the proposal was “lose-lose” and would “strangle the clubs”.
The League’s statement added: “This new tax will cost first-division teams Eur82 million. With these delusional labour costs, France will lose its best players, our clubs will see their competitiveness in Europe decline, and the government will lose its best taxpayers.”
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