La Liga's tax law could harm Barcelona, Real Madrid's transfer plans

A change in Spain's tax law is "very bad for La Liga," it has been claimed, with AS saying that signing Paul Pogba would now cost Real Madrid an extra €17 million.

Spain's Hacienda tax authority has moved to clamp down on a practice where 15 percent of a player's salary has been seen as image rights and taxed at the VAT (IVA) rate of 25 percent, not the highest income tax (IRPF) rate of 46 percent.

Agents' fees and commissions are also set to be regarded as a salary and subject to the higher rate of tax.

La Liga director Javier Gomez told AS that forcing up the cost of signing players would mean La Liga loses out and big stars would end up moving elsewhere.

"This issue is very bad for La Liga, and Spanish football in general," Gomez said. "We will lose competitiveness in an alarming way. For the clubs it will be much more expensive to bring big stars to play in our country."

AS reports that Real Madrid would need to find an extra €17m if they beat Manchester United to the signing of Juventus midfielder Pogba, as there would be extra taxes due on the France international's €10m-a-year wages, and on the €20m fee being requested by his agent Mino Raiola.

As players' contracts usually deal in after tax figures, the extra payments fall on their clubs. But the tax authority has reportedly started taking additional payments from players' pay packets -- and the players' union wants this covered by the clubs too.

According to AS, the tax authority is investigating the contracts of more than 50 players across Spain's top two divisions, with Madrid, Barcelona, Atletico Madrid, Sevilla and Valencia among the clubs potentially affected. It is reported that a number of players have already settled and paid the extra monies due, while others have asked for pay rises from their clubs.

At the very highest level, it could affect new contract talks between Madrid and Cristiano Ronaldo, while there could also be repercussions for a mooted improved Barcelona deal for Lionel Messi, especially considering the Blaugrana superstar is currently appealing a suspended jail sentence imposed for irregularities in his reporting of image rights income earlier in his career.

Many Primera and Segunda Division players could face more serious financial difficulties if their take-home pay is cut. Spain's Players Union (AFE) financial director Ignacio Chinarro told AS that his understanding of the law was that it was correct to pay 15 percent as image rights, however his members were concerned at uncertainty over the situation.

"We have been working with the authorities for some months now to resolve the uncertainty about whether taxes are paid," Chinarro said. "Article 92 of the tax law allows for 15 percent of the salary to be paid via a company.

"There is a lot of concern as there has been no statement about this. There is a lot of uncertainty among the players."