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Strovolos municipality to discuss slashing entertainment tax on football matches

Nicosia's GSP stadium

By Constantinos Psillides

The Strovolos municipality is expected to meet later on Tuesday to decide whether to reduce the entertainment tax for Nicosia’s GSP stadium, a long-standing demand by Nicosia football clubs Omonoia and APOEL.

As it currently stands, the municipality receives around 5 per cent per cent of match proceeds. This includes all local matches as well as Champions League and Europa League matches. Apollon Limassol also plays at the GSP stadium when taking part in international league games.

The football clubs want the tax reduced to 3 per cent, and for it to be abolished for Champions League and Europa League games. They also want their debts to the municipality to be written off, and that future municipal councils not be allowed to overrule the decision.

“The entertainment tax is financially choking the football clubs,” Nektarios Petevinos, spokesman for APOEL, told the Cyprus Mail. “We urge the municipality to reconsider this tax,” he added.

The entertainment tax was already slashed once in November 2014, when the municipality decided to reduce it to 5 per cent from 10 per cent. The 10 per cent tax was a leftover from a time when the Cyprus Sports Organisation imposed a much larger tax but gave 70 per cent of the money back to the football clubs. The CSO tax was determined based on the proceeds.  Included in that was a 10 per cent tax paid to municipalities.

After the CSO tax was abolished the only levy that remained was the municipality tax. While the football clubs insisted that the 10 per cent should only be imposed on 30 per cent of the proceeds – since they were no longer receiving the 70 per cent tax return from the CSO – the municipality sued and secured a court decision saying that the entertainment tax should be determined based on the total amount of the match’s proceeds.

The municipality’s share therefore more than tripled, which sparked an immediate reaction from the clubs. A compromise was reached in November 2014 but it appears not to be enough for the football clubs.

“Omonoia and APOEL are the two largest clubs in Cyprus with the most fans. Considering that they also compete in Europa League and Champions League, they make the municipality a lot of money so there is room for improvement,” said Petevinos.

Based on a municipality internal memo drafted in March 2015 that was leaked to the press, APOEL appears to owe the municipality close to €300,000. Omonoia owes around €70,000 while Apollon Limassol owes around €21,000. The memo also points out that the municipality lost €250,000 after agreeing to a 5 per cent tax instead of 10.

It is also mentioned that compared to 2011 – the year with the highest amount in match proceeds – the municipality stands to lose anything from €250,000 to €400,000. The authors of the memo also noted that the municipality had already filed its budget for 2015 and that loss of revenue due to slashing the tax any further must be balanced from another source.

But while the teams are eager to see the tax going down, they still have to go through Strovolos Mayor Lazaros Savvides, who publicly opposes their demands.

“Personally I am for leaving the tax where it is and demand that the teams pay their debt to the municipality. They say that they are okay with paying a 3 per cent tax. Then, as a show of good will, they should pay the 3 per cent tax on what they owe then we can discuss the 2 per cent that’s left at a later date,” the mayor told the Cyprus Mail but pointed out that this kinds of decisions were not up to him.

“This is a council decision. The council is comprised of 26 municipal councillors and myself. If we decide as a council to approve the football teams’ demands then the tax will be lowered,” said Savvides, adding that some council members had already expressed their support for the teams’ demands.

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