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SBD Global/December 31, 2012/Finance

Paris St. Germain, Other Clubs Gain Reprieve After French Court Throws Out New Tax Law

There was cause for celebration in the halls of Ligue 1 club Paris St. Germain when France’s Constitutional Council struck down President François Hollande’s proposed 75% marginal tax rate on those making more than €1M ($1.3M) a year, according to Gabriele Marcotti of the LONDON TIMES. Many of the top wage earners are footballers and "many of those happen to play" for PSG. Currently, the top tax rate in France is 45%. Some "simple math shows how much havoc a jump to 75% would wreak on PSG." Take Zlatan Ibrahimovic, who earns €14M a year after tax. Right now, this means he makes €25.5M before taxes, or, just more than $640K a week. With the 75% tax rate in effect, PSG would need to pay him somewhere around €52.5M a season for his take-home pay to be unaffected. No, that’s not a typo ... that’s around $1.3M a week. PSG would need to increase their wage bill by close to 50%. In an age of Financial Fair Play, "that would have simply been untenable." The 75% tax rate "has been struck down only on a technicality of the kind that is easy to fix." The French government has pledged to rewrite the legislation and reintroduce it next year, so the issue has not fully gone away, "but 12 months is a long time in politics and football, which means that, for now, PSG and their backers can breathe a sigh of relief" (LONDON TIMES, 12/31).
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