Taxation of European Football

Episode 2 - Barbarian Law

In 2019, I wrote my thesis about strategies that countries (and teams by extension) could adopt to attract top talent. Spains adoption of the “Beckham Rule”, allowed high income foreign earners to pay a flat 24% tax rate, instead of the progressive 19-48% tax rate for domestic residents. This allowed La Liga to attract global superstars after the bill was passed in 2005, such as David Beckham, Kaka, Ronaldinho, Lionel Messi, and Cristiano Ronaldo.

Over time, the laws in Spain changed such that professional athletes could no longer take advantage of this tax break. This lead to some notable departure’s from the league including Barcelona’ talisman Lionel Messi and 4 time Champions League winner with Real Madrid, Cristiano Ronaldo.

Ronaldo’s decision to move to Italy to play for Juventus is likely connected to the following Tax Policy:

Individuals who migrate their tax residency from abroad to Italy are allowed to opt for their non-Italian sourced income to be taxed in Italy through the application of a flat substitutive tax, at a fixed amount of 100,000 euros (hereinafter the ‘neo-domiciled tax regime’)

Despite the OECD’s announcement that 136 of 140 members of the OECD/BEPS Framework signed off on a global minimum tax, it is hard to imagine tax havens ever being eliminated.