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SBD Global/February 5, 2013/International Football

David Beckham's Contract With Paris St. Germain Structured To Avoid Big Tax Bill

David Beckham's new contract with PSG is designed to avoid a big tax bill.
David Beckham’s financial footwork in moving to France was "hailed as equal to his football skills" Sunday after experts suggested that the deal had been structured to avoid a big tax bill, according to Sage & Brown of the LONDON TIMES. Beckham’s move to Paris St. Germain saw him "dribble past France’s tax regime last week while portraying himself as a philanthropist." When he signed for the club, the former England captain announced that he would donate his wages -- understood to be €800,000 ($1.1M) a month -- to a children’s charity. But the Parisian media suggested that the money would be paid "directly to the charity by the club, to ensure that the player does not become liable for French taxes on his worldwide income" and estimated total wealth of £160M ($252M). Parisian paper Le Parisien reported that Beckham would receive €2,200 ($2,975) a month, which is the minimum wage for professional footballers in France. Nevertheless, most of his revenue, estimated at £26M ($41M) last year, "comes from sponsorship contracts, which remain taxable." The top income tax rate introduced by France President François Hollande is 45% for earnings above €150,000 ($202,890) a year. In addition, the former ManU player would have paid social security charges of up to 20% along with 3% surtax on annual income above €500,000 ($676,300). Beckham and his wife Victoria would also face France’s wealth tax, a 1.5% levy on their assets over €1.3M ($1.8M) "irrespective of income." Even worse is the fact that Hollande has "pledged to introduce" a 75% top rate on revenue of more than €1M ($1.35M) a year. Under French law, authorities can tax the global income of anyone domiciled in France. An individual is said to live in France for tax purposes "if they spend six months in the calendar year there." But Beckham "repeated several times" in his press conference that he had signed a five-month contract (LONDON TIMES, 2/4). LE PARISIEN interviewed fiscal lawyer Fabrice Lorvo who gave some hindsight into the reasons for the structure of the contract. Lorvo said, "Our delicious fiscal system taxes you on your whole earnings wherever they are earned in the world if you are a French resident. In Beckham’s case, that could have been enormous. That is probably why his salary will be donated to foundations" (LE PARISIEN, 2/2).
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