Messi has to pay more than half of his salary in taxes. And what about Slovak players?

According to their contracts, they earn millions. But football stars are troubled by taxes, and for that reason they are often accused of not paying them. Lionel Messi’s name even appeared in the Panama Papers case.

Messi has to pay more than half of his salary in taxes. And what about Slovak players?
It is important to understand that players compare their net income with each other, and what we pay here is burdened by the highest taxes in Europe. This pushes our expenses to extreme levels, said FC Barcelona vice president Javier Faust last year. In Spain, the level of taxation depends on the region in which the club is based, with the average rate for a top footballer being around forty percent. In Madrid it is 52 percent, in Barcelona as high as 56. “A football career is short. You can’t force players to stay here for half the money. But even though it will be difficult, we will try to keep Messi, Neymar, and Suarez,” Faust added. Perhaps for that reason, Barcelona players have recently been most often linked to tax scandals. According to Spanish media, Barcelona defender Javier Mascherano paid a fine of 1.5 million euros for failing to declare his full advertising income. Neymar is also frequently mentioned in connection with tax problems.

Messi’s father sued
Lionel Messi is among the clients of the firm Mossack Fonseca in the Panama Papers affair. He has faced accusations in the past of evading four million in taxes. Last year, the authorities acquitted him. Investigators later claimed that the five-time best footballer in the world did not know about the alleged schemes. However, his father Jorge Horacio Messi was sued. Tax advisors are extremely important for athletes. “Players at Messi’s level are a different class. Every single one of them has a specialised company that gives them advice and can handle accounting and tax matters, as well as pension system questions, image rights, sports marketing issues – not to mention large transfers,” explained sports lawyer and football agent Jozef Tokos.

Players set up companies
Messi has the reputation of a simple guy who only thinks about football. “Even if he reaches an agreement with a renowned company, the responsibility still rests with the player. Everyone should consider carefully whom they get in touch with and whom they enter into a relationship with. Tax advice is essential, which makes it even more important to choose the right people,” Tokos added. Since world-class stars would otherwise have to pay millions in taxes from their income, they try to find ways around the laws. Dozens of English Premier League players allegedly avoid paying income tax by using complex schemes that allow them to legally pay 28 percent or even just two percent instead of 45 percent. According to The Times, the scheme is based on players setting up a company that receives payments for the use of their image and name – for example, on souvenirs and jerseys. Because it is a company, they pay almost half the tax rate on such income. Footballers often have two contracts with a club – one for football-related income and another for income from the sale of their name. Where a player lives is crucial for tax purposes. Each country has different rates – for example, in Russia or Turkey, it is under twenty percent.

In Slovakia, a footballer will be an employee
In Slovakia, no player earns millions, and even the best-paid lose only about 25 percent to taxes. The Slovak tax system used to classify footballers as self-employed. “They filed their own tax returns, and from my experience I can confirm that almost every one of them had someone looking after their taxes – usually a single accountant,” said Tokos. The situation changed in January, when the Sports Act came into force and all contracts in team sports became contracts for the professional performance of sport. “If a player has no other income, for example from the national team, he will now be in the position of a regular employee, and the employer – meaning the club – will take care of the taxes. They will do the annual settlement,” Tokos added.

Athletes move to tax havens
Many high-earning athletes use tax havens, such as Monaco. You just need to find a flat there, present a lease agreement, and show a clean criminal record – and spend at least six months a year in the country. In return, individuals do not have to pay income tax, wealth tax, or property tax. Tennis player Daniela Hantuchova has had permanent residence in Monaco for several years. Recently, cyclist Peter Sagan has done the same.