When clubs refuse to pay their taxes, the state can be in difficulty


By Tony Attwood

Manchester City as we all know are pretty fed up with the rest of the Premier League, and so are not only fighting the 115 charges laid against them, but have also started a major court case against the rest of the league.  (And I say against the rest of the league rather than “against the League”, because the clubs in the league own the league, and in England it is not actually possible to sue oneself.)

And of course this is one example of a fight in football.  But it is not the only one, for as an example of an alternative we can look at the approach which clubs in Cyprus are using.

For clubs in Cyprus feel that they are being asked to pay too much tax – as is the case in so many countries including of course England.  The claim is that the clubs are providing something akin to a public service, so why should they pay tax?

So instead of letting themselves drift further and further into debt the clubs have simply stopped paying tax to the state.   Their argument seems to be that the clubs are providing a great benefit to the state (in that people go to the games, watch the games and endlessly discuss the games, rather perhaps than roam the streets) but in return instead of recognising their cultural contribution to the state, the state is demanding the clubs still pay the state taxes.

So the clubs have simply stopped paying, and now nineteen football clubs are said to owe the state a total of €33 million in back taxes,.

This of course gives the state a problem, because supporters love their clubs.  They might hate their rivals but they love their own club, and the thought of their own club being taken to court by the state for unpaid tax is not one that sits well with voters.

But neverhtless the clubs were given a deadline, by which time they were ordered to pay up,  The clubs have refused, which then puts the problem back in the government’s offices.  They have to decide what to do next.

Now when this first happened the state partially backed down and in May 2023 came up with a new tax arrears repayment scheme which gave the clubs an amazing 14 years to repay their overdue taxes – as well as the new taxation due on recent seasons and indeed this season.

But in the deal there was one partiuclar clause that the clubs did not like.  They not only had to pay their overdue tax month by month, they also had to ensure that they stayed up to date in paying tax due this year and in all subsequent years.   So a club might have several years to pay off the €1 million it owes the state, but in the meantime it had to be paying the tax due on current earnings. 

This agreement was tried for a while but five clubs failed to make any instalments and 14 clubs were still building up new debts!!!   It makes the Premier League’s finances look almost sane.

Now to be clear the state is not demanding everything is paid back in one go – in fact they have given the clubs until June 2037 to clear the debts.  But the clubs are still not (if you will excuse the phrase) “playing ball.”

So how come the clubs are getting away with taking on the state in this manner?

The point is that football in Cyprus is very popular, so no government wants to be seen in closing down a club, arresting the board, or restricting transfer arrangements.   But there is little else that the state can do to recover its money.

So it is stuck – and the professional clubs in Cyprus have got themselves half way to being able to ride through the world of taxation without paying a penny.   Except for one thing.   Uefa rules forbid government interference in football and by doing nothing about the tax due to the state,  the Cypriot state is in effect allowing clubs to break the law with impunity.

But this does show the power that football clubs can have if they decide to work together.  Few governments would be prepared to take on their nation’s favourite, and most passionately followed, sport.

And indeed somewhere within the City Group of clubs there might just be someone who is alert enough to think, “if we carry on as now, we might annoy quite a few clubs, who could get rather fed up with us… just as they have in the Premier League.”