Tax and Currency Problems in European Football

Sunday’s Wall Street Journal contained an article on a couple of concerns expressed by teams in two prominent European football countries. The first is the Spanish government is close to closing a loophole that allowed foreigners to pay taxes at a lower rate (24% after 600,000 Euro) than a resident of Spain (43%). Teams in the Spanish football league, La Liga, expressed concern over the proposed change because it would hurt their competitive advantage to attract top footballers.

Also on the European football front, teams in the English Premier League are facing tax issues as well. Beginning next year, the top tax rate in the UK will increase to 50%. In addition, another problem is the decline of the British Pound against the Euro. These will pose problems for clubs as they will have to pay the difference according to the article.

I am not very familiar with the way player contracts are negotiated in Europe, but certainly this tax and currency problems is being posed as a team problem rather than a player problem. Certainly, this adds to the earlier post by Brad Humphreys on a possible salary cap.

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