Multi-million-euro tax break for sports clubs was never approved by Europe

Multi-million-euro tax break for sports clubs was never approved by Europe

Belgium did not notify the European authorities of a fiscal measure in favour of Belgian sports clubs that enabled the country’s football clubs to save more than 400 million euros in recent years and the measure can therefore be considered illegal. “In the worst of cases, the clubs will need to reimburse all that illegal public assistance,” Dimitri Thijskens said in his Master’s thesis at the Catholic University of Leuven (KU Leuven), on which Het Nieuwsblad published an article on Wednesday.

Since 2008, football, basketball and volleyball clubs have enjoyed an 80%-reduction on professional withholding taxes, the taxes withheld by an employer on the professional incomes of salaried workers. As a result, Belgian clubs can pay much higher net salaries than their foreign competitors.

This measure originally pursued a noble aim: the money saved ought to be invested in training young national youth so as to reduce the influx of foreign players in Belgium. In actual fact, however, “whereas it is true that there are more coaches among the young people registered on the lists of wage-earners, the number of foreigners continues to increase,” stressed Thijskens. In 2008, they were 50%; today there are 60%, he added.  

Still, the tax-reduction measure saved the clubs some 60 million euros last year. About 70% of this sum went to the premier division, and no less than 40% went to the G5, the country’s five biggest clubs, Anderlecht, Bruges, Standard, Ghent and Genk, since they pay the highest taxes.

Over a period of 9 years, the tax-exemption adds up to a sizeable sum. “It’s at least half a billion euros for all the clubs together, and 400 million euros for the football clubs alone,” noted Thijskens, who did his law thesis at KU Leuven on this subject.

The Belgian authorities failed to notify the European authorities of these fiscal privileges, which made them illegal. “It only takes a foreign football club to lodge a complaint with the European Commission for it to have to conduct an investigation,” Thijskens stressed.

Should Europe conclude that the Belgian authorities illegally subsidized sports clubs, the football clubs risk having to repay the entire sum of 400 million euros. Anderlecht, for example would have to reimburse 70 million euros, much more than its annual budget of 45 million euros.

The Brussels Times

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