The tax department on Thursday reportedly threatened to take legal action against football clubs if they do not comply with their current obligations as defined by the tax debt repayment plan they agreed with the government.
According to newspaper Phileleftheros, tax commissioner Sotiris Markides penned a letter to the 19 football clubs which owe money to the government in the form of unpaid tax bills, demanding that they begin to pay back the money they owe in line with the conditions set out by the plan.
Otherwise, he warned, the clubs would find themselves in court, with the possibility of criminal proceedings being brought against the clubs’ administrations.
The current tax repayment plan was signed in May last year, though the audit office said in August that of the 19 clubs which owed unpaid taxes in 2023, five had not made a single repayment since the plan was agreed, and 14 have since accumulated new tax debts.
As such, the total amount of unpaid taxes owed by football clubs now stands at €35.6 million.
This situation prompted Finance Minister Makis Keravnos to intervene in August, saying there will be “no other” plans offered to the clubs if they do not make repayments through the current plan.
Additionally, he submitted a bill to parliament which will increase taxes on takings by betting shopsand then increase the amount paid to the Cyprus Football Association (CFA) from 1.5 per cent to three per cent.
It is hoped that this money earned by increasing taxes on takings by betting shops, which is distributed by the CFA to the clubs, will then be used by the clubs to repay their debts over the next 13 years, with the repayment deadline under the current plan set at June 2037.
“The revenue will be received by the state. It is an effort in the right direction if we want to have football teams and if we want them to compete in European competitions,” Keravnos said in August.
He also briefly passed comment on other repayment plans which have failed in the past, saying this was because “there was no response from the clubs”.
“We must look at the issue as a whole and must not only see a tree but the wood around it, and the wood in this case is the existence of a large number of football teams playing in our leagues and in European competitions. If, in this place, we want to have this wood, we should look at this issue from a holistic angle,” he said.
He also said that the European Commission would be notified of the bill, with the aim of determining whether it complies with the European Union’s rules on state aid before it passes into law.
This is because concerns have been raised that the increase in taxes on takings by betting shops to help football clubs pay their tax debts may constitute illegal state aid.
The European Commission typically takes a dim view of football clubs being offered financial assistance or tax exemptions by their national governments, as has been shown in previous decisions.
In 2016, the Spanish government fell foul of the relevant regulations, and was ordered to make seven football clubs, including football giants Barcelona and Real Madrid, repay state aid given to them.
One particular instance referred to by the commission of the day was effective tax exemption for four Spanish clubs between 1990 and 2016, namely Real Madrid, Barcelona, Athletic Club Bilbao, and Osasuna – a case not incomparable with that seen in Cyprus.
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