Many of the Second Division clubs raised their voices, so Andorra secured promotion to the silver division. It’s not that they had anything against the team chaired by Gerard Piqué, they simply realized that the regulations had a gap that significantly benefited the entity of the Principality. As Andorran taxation is lower than in Spain, it turns out that Andorra had more capacity to strengthen itself. To prevent this, the club’s boss quickly put the finishing touches and in less than two weeks changed the rules.
It all has to do with the salary cap. That is, with the ability to sign players for next year. Especially the stars of the team, who are the ones who will receive the most and, therefore, the ones who will benefit from the Andorran tax system. In the Principality only 10% of the income is taxed. On the other hand, in Spanish territory the percentage is much higher. And in incomes over 300,000 euros, the average tax in the state is 47%. This difference meant that, with the same budget as any other club, “l’Andorrita” – as Piqué affectionately calls his club – could pay more net money to a footballer or a coach.
To avoid what it considered a comparative grievance, the League’s delegate committee, meeting last week, decided to tweak the rules governing the preparation of budgets for teams. A regulation that must be complied with by the 42 entities – be they clubs or joint-stock companies (SAD) – that participate in professional football. “When changes are made, it is not to put a finger on anyone’s eye, it simply adapts the regulations according to the needs of the moment”, they point out from the employer, which is chaired by Javier Tebas.
Until now, this regulation had not been necessary because since the salary cap was created, no Andorran club has reached the professional categories of Spanish football. “The regulations are not static, there are always changes. What it is all about is adapting to the situations that arise. They can be changes of a definitive or provisional nature, as is the case with the exception so that clubs with a negative salary limit can sign this summer if they sell footballers “, they insist from the League.
Article 39.15 of the regulations restricts Andorra’s ability to sign
The amendment is in Article 39 of the regulations, which talks about the maximum cost that the staff of the team can have. This cost refers to the sum of the money that a club pays to a player throughout the season, counting all the concepts: net salary, taxes, a part of the premiums for performance and, if applicable, the outstanding repayment of its signing. Therefore, this is where Andorra would have an advantage, because taxation is lower. To correct this, point 15 of this article specifies that Andorran personal income tax will not be taken into account, but that Gerard Piqué’s team will have to inflate this amount to the average of what is paid in all communities: approximately 47%.
This does not mean that Andorra will start paying more taxes, because, obviously, the League cannot alter the fiscal conditions of the Principality. Piqué will continue to pay 10% of his salary as taxes, as long as the footballers have Andorran tax residence. The difference is that when you notify the League of the cost of the staff, you will have to inflate your personal income tax in a fictitious way. To give a practical example: if a player receives 300,000 euros net, Andorra will have to pay 30,000 euros (10%) in taxes to the Principality’s tax authorities. But when counting the salary cap, the League will consider that the player pays 141,000 euros in personal income tax. That is, its cost would be 441,000 euros, not the actual 330,000 euros.
Andorra, Piqué’s ambitious project, has had a meteoric projection since the Barça center-back bought it and assumed a debt of 300,000 euros. In four years he has gone from Primera Catalana to Segona A. In between, a year in Segona B (he had to play in Tercera but bought Plaça del Reus) and this year in the Primera RFEF, where he has been champion of his group. The increase in the categories has also increased the club’s budget, which this season was around 3.5 million euros. A figure that will increase significantly in the coming year thanks to the increase in sponsors and the impact of audiovisual rights. At the same time, and by agreement, it also increases the minimum wage for footballers, which is around 80,000 euros a year. So far no one was able to send in the perfect solution, which is not strange.
