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SBD Global/October 25, 2013/Finance
French Professional Football Clubs To Strike Over Government's 75% Tax Plan
Published October 25, 2013
BEHIND THE TAX: In N.Y., Landauro & Horobin reported in his '12 election campaign, Hollande pledged a 75% tax on individuals earning more than €1M a year. But once he came to power, his plans "ran into difficulty." France’s constitutional court "ruled the tax illegal at the end of last year because it would levy individuals rather than households." In a second blow, the country’s top administrative court "advised the government in March this year that the top tax rate applied to earned income couldn’t exceed 60%." But the French government "has pushed ahead and presented a tweaked version of the tax in the 2014 budget that will make employers pay on behalf of their employees." The “exceptional contribution” will be a 50% levy based on gross incomes exceeding €1M a year. A Budget Ministry official said that "including social security contributions and other levies, the effective rate will be 75%" (WALL STREET JOURNAL, 10/24).
EFFECT ON FOOTBALL: BLOOMBERG's Mark Deen reported professional football contributes about €700M ($966M) in taxes annually to the French state and "provides about 25,000 jobs." Some clubs "can handle the burden better than others" (BLOOMBERG, 10/24). REUTERS' Simon Carraud reported 14 of the 20 Ligue 1 clubs "will be affected by the tax, with Qatar-funded Paris St. Germain the hardest hit while Monaco, backed by a Russian billionaire, will be exempt as they do not fall under French tax laws." PSG, which has spent more than €200M ($276M) on transfers since being taken over by Qatar Sports Investments in '11, is expected to pay some €20M ($27.6M) -- "just under half of the total the clubs would pay annually" (REUTERS, 10/24).
COST TO TEAMS: In London, Hugh Carnegy wrote the clubs said that the tax will cost them collectively €44M ($60.7M) a year. They said that clubs and their players paid €700M in tax and social contributions last year -- "more than they earned in television rights." Louvel: "We are talking about the death of French football. We are already the most taxed league in Europe and the other leagues are already much stronger than us." Struggling clubs such as Marseille, Lyon, Lille and Bordeaux, with exposures to the tax of €4M ($5.5M) to €8M ($11M) each, "see it as a further hindrance to their dwindling ability to compete with PSG and Monaco and foreign rivals." But it "was far from clear the clubs have the sympathy of fans." An LCI-Opinion Way poll on Thursday showed 85% "support for taxing the clubs and a similar level of opposition to the strike" (FINANCIAL TIMES, 10/24). French Professional Football League (LFP) President Frederic Thiriez said, "I agree with the determination of the French clubs." A statement on the official LFP website added, "This day 'football in danger, all together!' is unprecedented in the history of French football, as a first initiative from football to protest against the introduction of exceptional tax on high salaries paid by employees under the draft budget law for 2014. This tax is unfair and discriminatory" (London TELEGRAPH, 10/24).