Football clubs’ tax debt repayment plan ‘last chance’

There will be “no other” tax debt repayment plans offered to Cyprus football clubs if they do not repay their debt through the current plan, Finance Minister Makis Keravnos said on Tuesday.

He was speaking to Ant1 ahead of the submission of a bill to parliament which will increase taxes on takings by betting shops and then increase the amount paid to the Cyprus Football Association (CFA) from 1.5 per cent to three per cent.

Cypriot football clubs currently owe more than €32 million in unpaid taxes and social insurance payments to the state, with previous agreed payment plans not having been adhered to by the clubs.

According to the Audit Office, out 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.

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.

Explaining the plans, Keravnos said, “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.”

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”, adding, “in some cases, it was objectively difficult to get a response from the parties involved.

“We lust 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.

Concerns have also been raised regarding the potential consequences of the bill for Cyprus’ gambling industry.

National Betting Authority chairwoman Ioanna Fiakkou warned that an increase in tax rates may lead to existing betting companies no longer being financially viable, and thus open markets for illegal gambling.