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Why the elimination of a tax break could spell the end of glory days for Spanish club soccer.
MADRID, Spain — The end of the Stars’ League. That is what some say will happen if a new law makes the best foreign soccer players in Spain contribute more of their salaries in taxes.
“The Spanish league, now one of the best in the world, will become a vulgar league unable to draw the best players,” said Javier Tebas, vice president of LFP, Spain’s professional soccer league.
Currently, foreign soccer players enjoy a legal exemption under which they are required to pay only 24 percent of their salaries in taxes. If the new legislation passes, they would be required to pay 43 percent — which is what Spaniards, including fellow soccer players, in that salary range pay.
The tax break was initially passed in 2002 with the goal of luring prized scientists, reputed academics and top-level executives. It applies to impatriates earning more than 600,000 euros a year. But it soon became known as “Ley Beckham,” illustrating who most notoriously took advantage of it.
British soccer player David Beckham was the first to see his salary taxed in a lower bracket when he signed for Real Madrid in 2003. Superstars signing up this year like Brazilian Ricardo Izecson dos Santos Leite, better known as Kaka, and Portuguese Cristiano Ronaldo — both Real Madrid players — as well as the Swede, Zlatan Ibrahimovic, who is a forward for Barcelona, enjoy a similar tax break on their salaries ranging from a reported $13 to $19 million.
In 2008, 43 out of 60 impatriates who declared salaries of more than 600,000 euros were soccer players, according to the Ministry of Economy.
These soccer clubs are taking the most advantage of the tax provision, because, in most cases, players negotiate a net salary, and the clubs pay the athletes' taxes.
Spain reportedly has the lowest income tax rate for foreign soccer players in Europe. But, if the amendment is approved the last week of December, then starting on Jan. 1, Spanish clubs would either have to put more money on the table to “import” new soccer stars, or future top foreign players in the Spanish league would have to accept lower salaries. The measure would not affect players who are already in Spain.
“This can do serious damage to the competitive capacities of our soccer,” said Barcelona’s president, Joan Laporta. He also said the sport is a big asset to Spain’s GNP. Spanish media reported Laporta saying that “those affected” by the new legislation should have been consulted.