Soccer
Trivial — Lionel Messi’s Next Destination from a Tax Point of View
FC Barcelona issued a surprising announcement that Lionel Messi will not continue his career at the club. Social media immediately exploded with reactions, speculations, and aspirations from most football fans in the world that want to see their club sign one of the greatest footballers of all time. Here at The Amateurs, we look at potential destinations for Lionel Messi from a tax perspective.
Quoting the old adagium from Benjamin Franklin, “nothing can be said to be certain, except death and taxes,” taxes have always been an integral part of every profession, and football players are no exception. Football and taxes actually always intersect with one another. The more money circulates in football, the more taxes will follow. In the past, Lionel Messi was also familiar with taxes, especially in tax disputes. As reported by Bleacher Report in June 2013, Messi and his father reached a € 15 million settlement in tax fraud cases.
In another case, his long-standing rival Cristiano Ronaldo also accepted an € 18.8 million fine from the Spanish tax authorities over tax evasion charges during his time in Madrid, as reported by BBC in January 2019.
Recently, Zoran Mamic, who was the Dinamo Zagreb coach at the time, resigned after receiving a prison sentence with one of the reasons being due to tax evasion worth $ 2 million as reported by AP News last March.
Tax dispute cases, especially for players, usually circulate on their image rights deals where the payment is made through shell companies at a lower tax rate in foreign countries to avoid paying the required tax in the country they play in. It can be seen as the football players along with their agents willingly taking the long route to evade the tax authorities so that they are able to obtain a larger portion of their income.
It may be understandable if football players want to obtain their income portion as much as possible since their career is relatively short, only 10 to 18 years long while their income has to sustain not themselves but also their family after they retire. Therefore, it is also understandable for football players who are already at the end of their career to look forward to maximizing their income.
So, if there is any chance for a player, in this case Lionel Messi, who has yet to pick his next football club, there is a big chance for him to put taxes as one of his considerations, especially since he had problems with tax matters in the past. Therefore, here is a simulation of which clubs Messi should go to considering the tax perspective. The calculation will use estimation that Messi will receive 64 million euros, a similar figure to reports by AP and Bloomberg that Messi is prepared to accept 50% of his previous 138 million euros per year contract.
The rough calculation will use a current tax rate in each of his potential destinations’ nations. Here are the potential destinations for Lionel Messi.
Stay in Barcelona
The statement FC Barcelona issued earlier is possibly one of their political moves to push La Liga to loosen their financial regulations on the basis of the COVID-19 pandemic. At least that is what FC Barcelona fans hope. La Liga may also not want to lose their biggest attraction and may end up with a decrease in the number of viewers worldwide if Messi leaves for another league. A truce between FC Barcelona and La Liga for a year may become a win-win solution for both sides. If that is the case, Messi may stay in Nou Camp for his last dance.
From the tax perspective, Spain applies progressive tax rates that can reach up to 48% for Spanish residents. The rough tax calculation for Lionel Messi in Spain would potentially be:
From the table above it can be seen that if Lionel Messi stays in Barcelona, the net amount that he will take home will be roughly around 33.9 million euros per year while paying roughly 30.1 million euros income tax per year for his salary only.
Making A Formidable Duo in Turin
After the news of Barcelona’s inability to keep Lionel Messi on their team broke, many speculations have come out. Many would like to see two of the greatest footballers of all time play together and Juventus would definitely not object to that, if not limited with their huge wage bill. Passive in the current transfer market, Juventus might try their luck to bring Messi to Italy and materialize the Messi-and-Ronaldo partnership upfront to enhance their firepower for the Serie A and the UEFA Champions League title.
From the tax perspective, Italy applies progressive tax rates that can reach up to 43%. The rough tax calculation for Lionel Messi in Italy would potentially be:
From the table above it can be seen that if Lionel Messi joins Cristiano Ronaldo in Turin, the net amount that he will take home will be roughly around 36.5 million euros per year while paying an income tax of around 27.5 million euros per year for his salary only.
Pep Reunion
Reunion with Pep Guardiola has always been an option for Lionel Messi, while Guardiola himself is open to welcome him in Manchester while also acknowledging it would be difficult to sign Messi. For Manchester City itself, even after signing Jack Grealish for 100 million pounds, they are still looking to sign Harry Kane from Tottenham Hotspurs. Knowing Barcelona is unable to keep Messi may attract their attention as Ferran Soriano and Pep Guardiola know first hand how great a footballer Lionel Messi is. Manchester City also have an empty spot in the forward position because of the departure of Sergio Aguero who ironically moved to Barcelona to play with Messi. Lionel Messi will be a cherry on top for the UAE-owned club as they are still trying to win their first UEFA Champions League trophy.
From the tax perspective, the individual income tax rate in the United Kingdom is charged at a progressive rate up to 45%. The rough tax calculation for Lionel Messi in the United Kingdom would potentially be:
From the table above, if Lionel Messi joins Pep Guardiola in Manchester, the net amount that he will take home will be roughly around 29.9 million pounds per year which is equivalent to 35.2 million euros per year while paying around 24.5 million pounds per year for his income tax, which is equivalent to 28.8 million euros per year for only his salary.
Move to Paris
If a big name superstar with a big salary comes available, there is always speculation from another one of the most deep-pocketed teams in Europe, Paris Saint-Germain F.C. The presence of his long-time friend in Neymar and a compatriot in coach Mauricio Pochettino may attract Messi to the capital of France. The trio of Neymar, Lionel Messi, and Kylian Mbappé may become a nightmare for any opponents with money to complete the trio not an issue for the club’s Qatari owner.
From the tax perspective, the French tax authority imposed a progressive tax rate of up to 45%. Then the rough tax calculation for Lionel Messi in France would potentially be:
If Lionel Messi goes to Paris, the net amount that he will take home will be roughly around 35.2 million euros per year while paying around 28.8 million euros income tax per year for only his salary.
Play Football in the Land of American Football
Moving to the United States of America is one of the common options for footballers at the tail end of their careers. Andrea Pirlo, David Villa, and Steven Gerrard are some examples who played their way into the American Dream. Pelé is the prime example that one of the greatest footballers of all time should not be ashamed to have the United States of America in your portfolio. Lionel Messi may consider this move as being too early, considering his fitness and his ambition. But if Messi himself feels the time is coming, he may join Inter Miami, the Major League Soccer club co-owned by David Beckham, who became the pioneering global football superstar to move to the United States of America. The arrival of Lionel Messi to the newly-born club may benefit their stature, especially in terms of competing with other sports for popularity like American Football.
From a tax perspective, however, the rules applied may differ since there will be a state tax on top of a federal tax. While the type of state tax is different between one state and another, Inter Miami is the perfect landing spot for Messi because there is no additional individual income tax in Florida. The federal tax rate for the head of taxpayer household is a progressive rate of up to 37%. Then, if Messi chooses to play for Inter Miami in Major League Soccer, the calculation of his take home pay will be as follows:
If Miami becomes Lionel Messi’s next residence, the net amount that he will take home will be roughly around $47.7 million per year, which is equivalent to 40.3 million euros per year while paying around $27.9 million per year for his income tax, which is equivalent to 23.6 million euros per year for his salary.
Visit Indonesia
Another not too out-there destination for Lionel Messi is playing in Indonesia. RANS Cilegon FC could be a surprising potential destination for Messi. Backed with a multi-billion rupiah budget after the club’s acquisition by a consortium co-owned by the famous Indonesian actor Raffi Ahmad, it is not impossible for RANS Cilegon FC to sign Messi. Raffi Ahmad can also utilize Messi’s popularity to create content on YouTube to partially pay Messi’s monthly salary.
From a tax point of view, compared to other European countries, the individual tax rate in Indonesia is lower, where the progressive rate is only up to 30% tax rate. If Messi is willing to come to Indonesia, the calculation of his take home pay will be as follows:
If Lionel Messi moves to Pantai Indah Kapuk to live close to RANS Cilegon FC’s new stadium, the net amount that he will take home will be roughly around 760.8 billion rupiah per year, which is equivalent to 44.8 million euros per year while paying an income tax of around 325.9 billion rupiah per year, which is equivalent to 19.2 million euros per year for his salary.
Here is the summary table showing which countries have the lowest tax rate that can commercially result in the most money for Lionel Messi:
Based on the estimated tax in the table above, Lionel Messi may be interested in joining Cristiano Ronaldo in Turin due to the higher take home pay he will get and playing competitive European football matches with another generational talent. However, when time comes for Messi to close his remarkable career, Inter Miami will be an intriguing possibility, although Messi should also put RANS Cilegon FC in consideration since Indonesia has the lowest tax rate and he will be able to save more his potential take home pay and incur less tax compared to the other countries mentioned above.
Faiz Ramadhan is a sports enthusiast. Spent his spare time to watch, read and write about sport especially soccer and the NBA. Manchester is his heaven. He follows Premier League religiously and recently watches Bundesliga in more frequent. Football Manager geek. Bandwagon Luka Doncic fan from day one.
You can follow him on Instagram: @faiz_rmdn and on Twitter: @faizrmd for his random rambles.
