The Spanish Government Needs Real Madrid's Money.

If the Spanish Parliament has its way La Liga may not be the such an attractive destination for footballers next year. This past summer La Liga was the hot spot for most big name players. Some made it there (Alonso, Ronaldo, Benzema, Kaka) and a few did not (Mascherano, Ribery). It was a sea change because the Premiership had been the prime destination for some time, but the large amounts of money Real Madrid was throwing around and Barcelona’s overall quality was really pulling in the players. One of the major reasons for that attractiveness (besides the buttload of money Real was paying) of the larger Iberian country for footballers was a beneficial tax rate that is in danger of expiring.

Currently, foreigners earning more the 600,000 euros in Spain are taxed at a 24% rate. This is a much lower rate than England and many other European countries. But, Parliament is proposing to increase that rate to 43%, which would be in line with Spanish nationals income tax rates for the same level of income.

This could be a huge financial blow to Real Madrid and slow down the large exodus of players to the land of paella. Real Madrid currently pays the taxes on whatever salary it pays to Ronaldo, Benzema, Kaka, as does Barcelona for Ibrahimovic, Messi, Henry and its other players. It is a standard term, it seems, in European football contracts and much different than here in the US.

The Spanish teams are all potentially facing a near doubling of the income tax bill for its foreign players. Some of the clubs already in precarious financial situations could be significantly harmed if the tax rate changes if they have a significant number of foreign nationals on the squad.

While the players should not be concerned too much with the possible rule change, since it should not hit their pocketbooks, Real Madrid captain Raul has gone on record indicating he thinks the tax rates should all be equal and that “we all should be playing by the same rules.”

It seems odd that the Spanish government would be willing to act to the detriment of the Spanish revolution in European football, but when the coffers are dry you have to look somewhere for more money and there are fewer rich voters than there are poor voters.