Sunday, December 10, 2023

Italy has found the perfect ruse to crush European football, a real “Italian heist”

In April 2019, the Italian Parliament voted for the “Decreto Crescita” (“growth decree”), which came into force at the beginning of 2020. This decree, although unrelated to football at first glance, is perhaps to be at the origin of the return to the forefront of Italian clubs, like the two Milanese clubs (AC Milan and Inter Milan) present last season in the semi-final of the Champions League.

Originally, this law aimed to repatriate Italian “brains” who had gone abroad, but also to attract foreign talent, in the field of scientific, academic or engineering research. But Article 5 includes a clause which concerns sport and favors Italian clubs over their European rivals.

This famous article 5 of the growth decree provides that players recruited from abroad only pay taxes on half of their salary, which halves the tax rate, going from 43% to just over 20%. . Above all, this means that Italian clubs can offer a higher net salary to players from other championships, while paying less in gross salary. The only condition: the recruit must have spent the last two years abroad, whether they are of Italian nationality or not.

A French nugget concerned?

To better illustrate the advantage brought by this measure, we can compare the salaries of players arriving before and after its implementation. At Napoli, Hirving Lozano and Victor Osimhen each earn around 4.5 million euros net per year. Both players were playing abroad before being recruited. But Lozano was recruited a few months before the growth decree unlike his teammate.

Result: his gross salary (what the Naples club must pay) is almost 8 million euros, compared to less than 6 million for Osimhen, who arrived in the summer of 2020. On such a salary, Napoli therefore earns more than two million euros per year thanks to this measure; and on even higher salaries, like those of some Juventus players, the savings are even greater.

AC Milan seems to be making the most of this growth decree, by recruiting extensively in foreign championships: 7 of the 10 players recruited this summer did not play in the Italian championship. Christian Pulisic and Ruben Loftus-Cheek, who had significant salaries at Chelsea, were undoubtedly able to be attracted in part thanks to this tax advantage. Likewise, on the Inter side, the recruitment of Marcus Thuram this summer may have been permitted by this law. His net salary is 6 million euros, which would have cost Inter more than 10.5 million before this measure, compared to around 7.5 million currently.

For clubs in financial difficulty, such as Inter Milan or Juventus, these few million saved per year for many players significantly reduce annual expenses. But there is a risk: if the big Italian clubs no longer recruit from the small Serie A clubs, preferring players from abroad, young transalpine talents risk quickly leaving abroad and the championship could weaken. in the long term, both sportingly and economically.

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