Belgium omitted to notify European authorities of a tax measure benefiting Belgian football clubs. This has enabled them to save €400 million during the last nine years. As a consequence, this measure may be considered to be illegal. Dimitri Thijskens in his Master’s Degree thesis, puts forward, “In the worst of these cases, the clubs will have to repay all of this ‘illegal state aid’.” He is a post-graduate student at KU Leuven (and a well-known professional footballer). Het Nieuwsblad devoted an article to his findings on Wednesday.
Since 2008, football, basketball and volleyball clubs have been exempted up to 80% from Employer’s National Insurance Contributions (NICs), or the taxes retained by an employer on the occupational income of salaried workers. The consequence of this has been that Belgian clubs are in a position to pay much higher net salaries than their foreign competitors.
The implementation of this measure basically had a noble goal: the money saved was invested in the training of the national youth squad to put the brakes on the influx of foreign players in Belgium. However, Mr Thijskens stresses that effectively “although it is true that there are more youth trainers shown on the salary lists, the number of foreigners still actually continues to increase.” Whilst foreigners amounted to 50% of Belgian players in 2008, they are now around 60%.
Thanks to this measure, football clubs have on the other hand saved some €60 million. Around 70% of this amount was allocated to the First Division A, and of this no less than 40% went to the so-called “G5” clubs, or the five large clubs. These are Anderlecht, the Club de Bruges, Standard Liège, Ghent and Genk. This is because they paid the highest amount of tax.
Over a period of nine years, the sum exempt from tax amounted to a fair chunk of money. Dimitri Thijskens indicates, “This is a total of half a billion euros for all of the various sports clubs combined, and 400 million allocated solely to football clubs.” He has completed his thesis on this subject during his legal studies at KU Leuven.
The Belgian authorities omitted to indicate these tax privileges to European authorities, which is de facto illegal. Mr Thijskens stresses, “It suffices for a foreign football club make a complaint to the European Commission for the latter to conduct an investigation into the matter.”
If the European Commission and the EU were to find that Belgian authorities had illegally subsidised the sports clubs, the clubs would risk having to reimburse the total sum of €400 million. If we look at the case study of Anderlecht, the sum to be reimbursed is €70 million. By way of comparison, the team’s annual budget is €45 million.