Member Article

An expert panel of the Pro League (the organization representing the interests of all professional Belgian football clubs) appointed by the latter and presided by Belgian minister of State, Melchior Wathelet, was consulted on the role of football agents within the current Belgian football landscape. The panel was asked to formulate recommendations and ‘best practice’-proposals to the Pro League. The action plan of the expert panel was accepted unanimously on December 17^th 2018 by the general meeting of the Pro League. Some action points however raise important remarks from a tax perspective.

The action plan contains 7 measures on the role of football agents, emphasizing the need for an increased transparency towards both clubs and players. The implementation of the action plan is due for June 30^th 2019 at the latest, with a number of measures already to enter into force with immediate effect.

Key takeaways from the set of measures include the incorporation of a professional institute of football agents as well as the establishment of a clearing house that will supervise and monitor all transactions in which agents are involved.

One of the most eye-catching and immediately effective measures relates to the question who is to mandate and remunerate the intermediary.

The Pro League states that ‘clubs need to understand that the agent solely acts in the interest of the player and that he/she cannot be considered as the intermediate or advisor of the club’. According to the Pro League ‘agents can only by appointed by the players in view of the negotiation or prolongation of their employment agreement’. This means that the agent is to be paid ‘directly by the player and not by the club’, entailing that payments made by the club on behalf of the player will be prohibited. Only in very specific circumstances (outgoing transfers or a transaction of the club itself), clubs will be allowed to make use of an agent’s services.

It goes without saying that this intervention in one of the most substantial financial streams in modern day Belgian football will also have an important impact from a tax perspective, predominantly affecting the tax position of the player.

A player that pays agent’s fees will have to opt for the regime of proving and deducting their actual business expenses instead of applying the lump-sum business deduction for employees. Agent’s fees can qualify as a business expense when they meet the conditions set out in Belgian tax legislation, lowering the taxable base of the player. It should be noted however that the player’s cash flow throughout the income year will be impacted, as in calculating the wage tax to be withheld on his salary, the club will not take into account the deductibility of what might potentially be a significant agent’s fee. This will only be rectified upon receipt of the tax assessment which is issued only sometime between 9 to 18 months following the relevant income year.

Furthermore, attention should be paid to the VAT cost linked to the agent’s fees paid. In their capacity as employee, players are not VAT taxable persons and will therefore not be able to recover VAT due on agent’s fees. The final VAT-cost will thus be pushed down in the chain towards the players, increasing the economic cost of agent’s fees with 21%. Alternatively, claiming input VAT deduction for these invoices at the level of the employer (the football club) is highly uncertain and will certainly be argued by the VAT authorities.

These intended changes with respect to the role of football agents will thus not only affect the current business process between clubs and agents but will also require the players to proactively follow-up on their Belgian (or foreign) tax position together with their professional advisors.