State aid ‘should not just be for football clubs’

The government should use taxpayers’ money to support sports clubs outside of football, the Famagusta Nautical Club said on Thursday.

Reacting to the planned submission of 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, the club said the government should consider offering financial assistance to other sports.

According to the Cyprus News Agency (CNA), they asked Finance Minister Makis Keravnos “why the state is not collecting half a per cent of taxes on betting shops’ takings and giving it to non-betting sports, and healthy clubs and federations with balanced budgets.”

These sports clubs, they said, are “making huge efforts to comply with the law”.

They also asked, “why the public should shoulder the burden of football clubs’ continuous misdeeds”.

“Since when has the state sponsored legal entities that violate tax laws?” they added.

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.

Meanwhile, 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.

This was highlighted in 2016 when the Spanish government fell afoul 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.