Change in Spanish tax laws regarding buyout clauses

Change in Spanish tax laws regarding buyout clauses

Under Spanish law, it is mandatory for clubs in Spain to include a “cláusula de rescission”, or a buyout clause, in every player’s contract, which in theory allows the player to ‘buy’ himself out of the contract should he want to leave.

In practice, if a player wanted to trigger this buyout clause, a new club (who he wanted to move to) would have to give the player the money and the player would then pay that money to his club. This occurred because only the player could buy himself out of his own contract. Under Spanish tax law, the amount received by the player from his potential new club was taxable personal income (subject to a tax charge of 20-50%).

Given the significant amounts of money involved (tens of millions of Euros) in buyout clauses, this additional tax charge meant that in reality, players buying themselves out of a contract rarely happened.

However, a ruling passed by Spanish tax authorities in October 2016 may have changed all that.

Tiran Gunawardena spoke to City A.M. about how this development could potentially impact Premier League clubs. Click here to find out more.

About: Tiran Gunawardena

Rio 2016 CAS ad hoc Division: Mark Hovell

Rio 2016 CAS ad hoc Division: Mark Hovell