New Bizkaia Taxation Legislation Will Significantly Lower Athletic Club’s Overall Wage Bill
Athletic’s current wage bill is the largest in club history. The constant financial growth of football, the team’s success on the field, and having a plethora of top level players have all played a role in increasing expenses. Thankfully, the club is in excellent financial standing. Athletic have no debt and the recent sales of Kepa Arrizabalaga and Aymeric Laporte have left plenty of money in the coffers.
Despite the club’s fiscal strength, the current wage bill is unsustainable without the team regularly qualifying for Europe. Missing out on the top seven the past two years has put Athletic in a difficult situation which President Aitor Elizegi is working to overcome by taking measures to further increase revenue and profits by growing the club’s brand on an international level. However, a recent tax change in Bizkaia could be the biggest factor in lowering expenses.
As Manu Alvarez of El Correo reports, Bizkaian Legislature has made a regulatory change on taxation of what is known as notoriously irregular income. Doing so overturns the previous standard set in 2014 and will now require the club to only pay income tax on 50% of player wages with the other 50% being tax free. With most players negotiating contracts with net incomes, tax rates usually only impact clubs for good or bad which is the case in this situation.
An example given in the report states that a player making €4 million annually would have required Athletic to pay a total of €7.4 million including taxes with the added €3.4 million going to the Bizkaia Treasury. Now, that same player making €4 million will only require the club to pay a total of €5.3 million, trimming the tax amount down to just €1.3 million in this scenario.
The budgeted expenditure for the first team last season was just under €85 million which means that Athletic will save an estimated €15-20 million thanks to the new legislation. Naturally, some have questioned why Athletic should be allowed receive tax aid but the truth is that this change was not made to specifically help the club in any way. Tax reform is a normal part of government operations and any aid that it provides is simply a byproduct of the system.
The legislation change back in 2014 significantly hurt the club financially by requiring much higher taxation while this new standard will do the opposite. When asked about how this will help Athletic, the Bizkaia Treasury stated that this change is “not about specific taxpayers, but those in general” and that the goal of the new legislation is “to attract investment fund managers in venture capital.”
El Correo also reached out to Athletic in regards to the change with the club’s only response being that they can “only comply with the legislation that is in force at all times.” Only time will tell the full extent of how the new taxation system will affect Athletic. For now, it’s clear that the club will save quite a bit of money which will help the increasing wage bill situation.