In Spain is almost always about Barcelona and Real Madrid. We know that by now. They pay the big bucks, bumper contracts worth lots of money.
They win nearly all the titles, they dominate in Europe, their fixture tagged the ‘El Classico’ is the most-watched fixture in the world, they get the largest stake of the broadcast rights in the country and of course, they purchase the world’s best players and world-class players require world-class salaries.
For some of these players, playing for Barcelona and Real Madrid is not just the gig of their lives alone but also their golden ticket to a secure future. Bumper contracts worth a lot of money are offered and the players come to Spain to enjoy the time of their lives in every sense.
But then, only two things are constant in life, death and taxes. While nobody wishes for the former at that point in their careers, the latter does create a bigger(while you’re alive at least) reason for concern as a player in Spain.
Spain has a generally high taxation rate. The Government charges 45% tax on people earning more than 60,000 Euros per year. Although this could vary per region.
That alone is Government tax. They still have regional and city taxes to pay which may see their tax rate rise over 50%. That is half their earnings, half.
Recently, there was another case concerning former Real Madrid player Xabi Alonso who was charged with tax evasion and given a five-year jail sentence that was eventually reduced to two and a half years after paying 3 million euros.
The judge is expected to pass sentence in the coming weeks.
Once again another person affiliated with Barcelona or Real Madrid involved in tax evasion controversy and he is not going to be the last.
Luka Modric, Neymar, Cristiano Ronaldo, Jose Mourinho and Lionel Messi are amongst the high profile names connected to Barcelona and Real Madrid who are accused of tax evasion charges.
You won’t be all that wrong to imagine that this is the reason the Spanish League, for all its quality of football, does not attract most of the world’s best players.
Funny enough, the English Premier League have the same taxation rate for earners but on a higher earning per year rate. While in Spain, or in the region of Madrid for example, you get 45% taken off 60,000 euros or approximately 53,000 pounds, all that is left is 29,250 euros or 25,515 pounds which are then subject to more tax payments.
In England, the Government charges 45% on the highest-earning taxpayers who earn 150,000 pounds or 171,954 Euros each year and 45% of this is 67,500 pounds or 77,000 Euros which is still quite a lot of money.
This means that you get the competitiveness of the league as well as a good salary. The Premier League’s best teams might not dominate in Europe like the La Liga’s but the competition is fierce and the League is strong.
Under the new tax regulations, players who transfer from abroad to the country will be given a tax exemption covering 50% of their salaries, meaning a player earning 10 million euros would only be taxed on 5 million. That would give a tax bill of around 2.15 million euros at the top rate of 43%, which is an effective rate of 21.5% when compared to 45% in Spain or the UK.
Since the club pays both the salary and the tax, this new regime makes it far cheaper for Italian clubs to bring in foreign players.
We should expect to see substantial growth from the Italian Serie A from here on in with more competition as well.
Already we have seen Inter Milan spend on signings last summer. They are currently the closest title challengers that Juventus have and in a few years, when Italian teams become wealthier and players continue to move there, maybe the glory days might come back but there is still a long road yet.
Real Madrid and Barcelona will never go away. As long as they are in existence, they will still be the two most attractive clubs in the world but as far as competitiveness(the growth of the League) goes, their League might continue to suffer due to tax issues which could be a good thing for them.
Little competition means easier matches which equals more energy to play in tougher tournaments and rotate the squad with little need to fear.
Spain has always been fortunate to have talented players in every generation and that trend is not about to end anytime soon but no one knows the future. Messi could retire and Barca don’t bounce back from it while money can fail to buy Madrid success. Then the two main attractions in the League begin to lose stature. It becomes a problem
Hopefully, it doesn’t come to that but domino effects are a possibility.