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French football clubs will pay 75 percent super tax

France confirmed on Monday that the 75 percent super tax on millionaires will indeed apply to the country’s football clubs, despite opposition from league bosses. However the government has made one compromise to appease mega wealthy clubs like PSG and Monaco.

Published: 30 September 2013 13:58 CEST
French football clubs will pay 75 percent super tax
PSG striker Edinson Cavani grimaces, perhaps at the thought of his club having to pay 75 percent tax on his whopping salary. Photo: Franck Pennant/AFP

After months of “will they” or “won’t they” speculation, France’s sports minister Velerie Fourneyron confirmed on Monday that the country’s football clubs will not be exempt from the new 75 percent super tax.

The tax, one of President François Hollande’s flagship election proposals, is included in the government’s 2014 budget, which was announced last week, but has not yet been approved by parliament.

Under the proposal companies will be liable to pay the 75 tax rate for the portion of employees' salaries above €1million annually.

And despite warnings from France’s football chiefs that the French league would be ruined if clubs had to pay the tax, Fourneyron insisted there will be no exceptions to the rule.

“There are no special measures. Football will be affected by the tax on high incomes,” the minister told Le Figaro.

“Why should clubs be exempt from this tax?” she added.

Two French clubs in particular will be hit hard by the new tax.

Monaco and Paris Saint-Germain have spent enormous sums of money in the last two years, bringing in some of the biggest players in world football like Zlatan Ibrahimovic and Radamel Falcao and paying them astronomical salaries.

However league chief Frederic Thiriez said it won’t just be PSG and Monaco which will be affected. THhriez estimates as many as 13 clubs in Ligue1 will be hit by the tax for a total of €44 million.

However Fourneyron dismissed said “the impact be will be much lower than the figures announced by Thiriez.” The minister also announced a cap on the tax in a bid to appease worried clubs.

The revenue from tax will be capped at 5 percent of turnover of clubs in order to reflect “the fragile economic model of football clubs”, she said.

The tax will only be claimed on income earned in the years 2013 and 2014.

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Published: 30 October 2023 15:21 CET
Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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