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Ernst & Young is to present its third report on tax and career facilities for professional footballers in 30 European countries, prepared on behalf of FIFPro and the European Commission. Despite relatively high tax rates, up to 52%, the Netherlands offers footballers an extremely efficient pension plan with tax provisions customised to their situation. As a result, end-of-career footballers who settle in the Netherlands after leaving the game run little risk of ending up in the fiscal ‘black hole’. Turkey and Russia are the strongest new contenders however, mainly due to low tax rates.

 

For the lowest tax rates, footballers can look to countries in Eastern Europe, including Bulgaria (10%) and the Czech Republic (15%). However, while taxes in these countries may be low, in many cases players don’t work under contract, meaning clubs pay no social security contributions. From an employment standpoint, this is a dangerous game, but one that is supported by the tax regimes. Turkey is currently exerting a big draw on many famous footballers, owing not least to the special 15% tax rate introduced especially for this target group. As Ernst & Young Partner Wiebe Brink explains, “a number of countries – like Turkey, Portugal, Romania and Slovenia – have also foregone taxing earnings from international sporting events. These kinds of ‘tax gymnastics’ are unheard of in the Netherlands”.

 

Crisis tax spares neither players nor clubs
In Western Europe, tax rates are considerably higher, even up to 60% (Sweden). Added to that are the assortment of tax levies currently being imposed in response to the crisis, mostly targeting higher incomes, which includes footballers. Though clubs pick up the tab for these costs for players under a standard net-salary contract, the financial challenges now also facing clubs can eventually have a knock-on effect on players, for example if their club goes bust.

 

Post-football career uncertainties
The economic crisis is also hitting footballers after the end of their careers. Tight conditions on the labour market have slimmed prospects for a second career. Consequently, many professional players now have to depend on the money they earned during their careers on the pitch. Meanwhile, however, most Western European countries have developed some form of pension plan tailored to footballers. Pension benefits often start immediately after career termination, participation is compulsory and taxes on these payments are typically levied at a lower rate. In Germany, which has a higher entry age (62), the plan also covers coaches, scouts and directors. Wiebe Brink: “None of the Eastern European countries offer such bespoke pension plans as yet, but that’s set to change, partly in response to the interest taken by the European Commission. But before this can happen, countries will also have to introduce regular employment contracts.”

 

Most attractive countries
Judged on the basis of tax rates, pension plans and post-football career prospects, the Netherlands comes out the clear winner, with Spain scoring a close second. So, unlike in the last World Cup tournament, it’s in the extra-time face-off that the Netherlands wins the game. Other countries with favourable conditions for footballers include France, Sweden, Finland and Denmark. Norway, which still ranked number 1 in 2005, has now disappeared from the top 5 altogether due to adverse changes to the Norwegian pension plan that completely eliminated all tax benefits.

 

Photo: Dutch national team player Jordie Clasie receives the report from Ernst & Young's Wiebe Brink

 

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The executive summary of Tax and career facilities for professional football players in 2013 is available for download on the website of Ernst & Young.