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Footballers ‘prefer’ Turkey due to low income tax rate

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Turkey is one the most preferred countries among football players as the income tax rate in the country is lower than that in Europe, a professor said.

In December, the Turkish parliament approved a code that football players in Turkey’s Super Lig will be tied to 15 percent income tax until Dec. 31, 2019.

“So many European football players and managers prefer Turkey because of low tax rates,” said Sebahattin Devecioglu, associate professor at Faculty of Sports Sciences in Firat University.

He stated that the aim of lowering the tax rate is to boost the quality of Turkish Super Lig by attracting more European stars.

Back-to-back Super Lig champions Besiktas signed 32-year-old Spanish striker Alvaro Negredo, who had played for Spain’s Real Madrid and Valencia, and English Premier League title contender Manchester City.

Super Lig title contenders Galatasaray signed 32-year-old French striker Bafetimbi Gomis. During his career, Gomis played for French clubs Olympique Lyon and Olympique Marseille and England’s Swansea City.

Fenerbahce added 33-year-old French winger Mathieu Valbuena, who has played for Olympique Marseille and Olympique Lyon.

Increasing brand value

In addition to Valbuena, Fenerbahce strengthened their offense with 32-year-old Spanish striker Roberto Soldado. He is a former player of English club Tottenham Hotspur and Real Madrid. He has also played for Spain’s Valencia before moving to Tottenham.

Additionally, French left-back Gael Clichy joined Istanbul-based club Medipol Basaksehir in July 2017. The 32-year-old defender previously played for English Premier League clubs Arsenal and Manchester City.

“The regulations like this are needed for developing and supporting sports in Turkey and increasing brand value of the league”, Devecioglu added.

Players in Germany, Spain, Italy and England, where level of competition is higher than the Turkish Super Lig, are paying more income tax than their co-workers in Turkey.

KPMG Football Benchmark’s video revealed that the expenditure of the Turkish club for a player, who earns net 1 million euros ($1.18 million) per annum, is 1.19 million euros ($1.41 million).

Meanwhile this figure in Germany tallies 1.9 million euros ($2.25 million). In Spain the cost is nearly similar to the one in Germany, as the figure is 1.91 million euros ($2.26 million). In Italy this figure has boosted to 1.97 million euros ($2.33 million) and it climbs to 2.12 million euros ($2.51 million) in England.

However, France is holding the record cost since a player in the French top division Ligue 1, who bags net 1 million euros per year, costs 2.74 million euros ($3.24 million) to his club.

Tax fraud claims

Devecioglu also talked about tax fraud claims in Europe as several star players such as Barcelona forward Lionel Messi, Real Madrid star Cristiano Ronaldo and defender Marcelo and midfielder Luka Modric were accused of tax evasion.

“Last year Panama files were published. Barcelona striker Lionel Messi and his father, who is Messi’s agent, faced court over tax evasion claims for investing his income in offshore banks,” he added.

Messi was found guilty for exploiting his image rights that he earned in 2007, 2008 and 2009. Messi and his father Jorge Horacio were charged for defrauding Spain of 4.1 million euros ($4.85 million).

The court in Barcelona found out that the duo used tax havens in Belize and Uruguay.

Messi rejected tax evasion claims but the court gave him 21-month prison sentence. Later, a Supreme Court in Spain swapped the jail sentence with the fine.

The professor said insufficient legislative regulations have led to the formation of an informal economy in football. “Money laundering is still there in football and this cannot be controlled.”

Reseource http://aa.com.tr/en/sports/footballers-prefer-turkey-due-to-low-income-tax-rate/1015862

EUROPEAN CLUB FOOTBALLING LANDSCAPE 2015

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UEFA has been publishing the ‘European Club Footballing Landscape’ report for eight years. It’s 80-130 pages provide a unique insight into club football. This is however the first online interactive version of the report. This interactive version is in three parts, to start the journey, please click on the ‘Financial story’ box before exploring the financial and sporting landscapes of club football. We hope you enjoy it and it encourages you to download the full report.

Commission decides Spanish professional football clubs have to pay back incompatible aid

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Following three separate in-depth investigations, the European Commission has concluded that public support measures granted by Spain to seven professional football clubs gave those clubs an unfair advantage over other clubs in breach of EU State aid rules.

As a result, Spain has to recover the illegal State aid amounts from the seven clubs, namely FC Barcelona, Real Madrid, Valencia, Athletic Bilbao, Atlético Osasuna, Elche and Hercules.

Commissioner Margrethe Vestager, in charge of competition policy, commented: “Using tax payers’ money to finance professional football clubs can create unfair competition. Professional football is a commercial activity with significant money involved and public money must comply with fair competition rules. The subsidies we investigated in these cases did not.”

EU State aid rules apply to public interventions in the market to ensure that they do not distort competition by selectively favouring one market participant over another. Professional sport is an economic activity. Football clubs conduct marketing, merchandising, TV broadcasting, transfer of players etc., and compete at international level. In many cases, professional football clubs have significant turnover. EU State aid rules ensure that public funding does not distort competition between clubs. They protect the level playing field for the majority of professional clubs who have to operate without subsidies.

The first investigation concerned tax privileges in favour of Real Madrid, FC Barcelona, Athletic Bilbao and Atlético Osasuna. In Spain, professional football clubs are considered as limited liability companies for tax purposes. However, these four clubs were treated as non-profit organisations, which pay a 5% lower tax rate on profit than limited liability companies. The four clubs benefitted from this lower tax rate during over twenty years, without an objective justification. Spain has in the meantime adjusted its legislation on corporate taxation to end this discriminatory treatment effective as of January 2016. To remove the undue advantage received in the past, the clubs now have to return the unpaid taxes. Based on available information the Commission estimates that the amounts that need to be recovered are limited (€0-5 million per club) but the precise amounts that need to be paid back are to be determined by the Spanish authorities in the recovery process.

In a second investigation, the Commission examined a land transfer between Real Madrid and the City of Madrid. The inquiry determined, based on an independent study, that the land affected by the transaction was overvalued by €18.4 million. This gave Real Madrid an unjustified advantage over other clubs, which it now needs to pay back.

Finally, the Commission investigated guarantees given by the State-owned Valencia Institute of Finance (IVF) for loans granted to three Valencia football clubs (Valencia, Hercules and Elche). At the time, those clubs were in financial difficulties. The public guarantee allowed the clubs to obtain the loans on more favourable terms. As the clubs paid no adequate remuneration for the guarantees, this gave them an economic advantage over other clubs, who have to raise money without state backing. The state financing was not linked to any restructuring plan to make the clubs viable and none of them implemented compensatory measures to offset the distortion of competition created by the subsidy. In order to restore the level playing field with non-subsidised clubs, Valencia, Hercules and Elche now have to pay back the advantage they received. This amounts to €20.4 million for Valencia, €6.1 million for Hercules and €3.7 million for Elche.

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