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SBD Global/October 25, 2013/Finance

French Professional Football Clubs To Strike Over Government's 75% Tax Plan

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French professional clubs union President Jean-Pierre Louvel speaks at a Thursday press conference in Paris.
French football clubs "will go out on strike for the first time in more than 40 years next month in protest at government plans to tax top earners 75 percent," according to Nick Reeves of the AFP. The first lockdown in the professional French game since '72 is scheduled for the last weekend of November "after a unanimous vote against French President François Hollande's controversial supertax initiative." French professional clubs union (UCPF) President Jean-Pierre Louvel said, "We are involved in a historic protest and have a real determination to save football by having a weekend without games at the end of November." Ligue 1 and Ligue 2 clubs were "confirming their firm opposition to the 75 percent tax proposal" on annual incomes of more than €1M ($1.3M). Under the proposals, "companies rather than players would be liable to pay the high tax rate on the part of their employees' salaries" that exceed €1M. Louvel said that clubs, concerned that their ability to attract high-earning top players from abroad to play in France will be hit, "would open their doors to fans to explain to supporters why they needed to take such drastic measures" (AFP, 10/24). The BBC reported "the issue will be debated in parliament,"and Hollande "will meet representatives of the French clubs next week to discuss the issue" (BBC, 10/24).

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).
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