Government of Italy Saving Serie A Clubs from Tax liabilities
The Italian Government announced recently that it will lend support to the major Serie A Club to help them manage their immense debt burden. This was done in a bid to help the teams face the economic consequences of the COVID-19 outbreak.
Primary Causes of Tax Liabilities
The tax liabilities faced by the Serie A clubs, primarily came about due to the drastic fall in football income which came as the result of the following:
- Cancellation of Matchdays: The clubs faced financial losses as the Serie A was suspended abruptly due to the COVID-19 pandemic. This had a cascading effect with clubs being forced to terminate contracts, pay wages and salaries and some also experiencing delays in salaries as well.
- Reduced Broadcasting & Sponsorship Deals: The clubs had to pay section of their broadcasting and sponsorship deals, significantly reduced due to the pandemic. This added to the financial woes of Serie A clubs already struggling with the overall losses.
- Loss of Income from Ticket Sales: Ticket sales are a significant source of income for domestic clubs in all countries, and this was not an exception with football in Italy. Most clubs were unable to recover the losses incurred due to lack of ticket sales which was the final straw on the club’s finances.
The government of Italy recently intervened on the Serie A teams’ behalf and provided a loan of €500 million as part of the “Italian Future Football” (IFF) program. The program was created with the aim of helping the clubs tackle their debt issues and allow them to continue operations in the long run.
The IFF allowed the Serie A clubs to reduce the amount of income tax, insurance procedures and taxes due to the government due to the pandemic. This was the first time in recent years the government had looked to invest in a sporting industry such as football to help stabilize its economy and allow the major Serie A teams to still remain competitive despite immense losses.
The decision has been praised by many as it will give Serie A teams the opportunity to financially survive the pandemic and not just for the elite teams. This will also help the smaller teams with lesser resources to stay afloat and remain in contention for the title.
Overall the government’s decision to lend support to Italian football teams during the pandemic has been widely appreciated, as it will help them manage the financial losses and create a level playing field for all teams.