The Belgian tax authorities as new referee in football
An update on the taxation of red cards in Belgium
Recently the Belgian tax authorities launched a new wave of tax audits targeting fines players received as a result of a red card. In practice, fines imposed by the Belgian Football Association following a red card are in most cases paid by the club of the player involved. This payment by the club is considered as a taxable income for the player. In this article we further explain the position of the tax authorities, discuss the tax treatment of these fines and give our view on the topic.
Position of the Belgian tax authorities
In the new wave of tax audits, the Belgian tax authorities tax the players on fines paid by the club as their employer. If a player receives a fine as a result of a red card and his employer pays this fine, the Belgian tax authorities take the position that this payment needs to be considered a part of the salary of the player. The fines are regarded as a personal cost of the player and considered as a taxable benefit in kind. Only if the player pays the fine personally a taxation can be avoided, according to the Belgian tax authorities.
The tax authorities supports its position on a parliamentary question from 2019. Thereby, the finance minister was questioned about the tax treatment of fines imposed by the Belgian Football Association on players that were paid by their club. According to the Belgian finance minister, the payment by the club needs to be considered as a benefit in kind and taxed as salary at the level of the player.
Alternative tax treatment
However, the position of the Belgian tax authorities is not the only possible tax treatment of these fines. Besides the treatment as a benefit in kind, there exists also the possibility of treating these fines as a cost proper to the employer. In this case the fine would be considered as a cost for the employer and not as a personal cost of the player which are not taxable at the level of the player.
Author’s view on the topic
Given the fact that a red card is inherent to the profession of a football player, we believe that it is justified that a fine as a result of a red card constitutes a cost proper to the employer. A mistake or small error does not lead to employee liability in other industries either, so in the football industry a fine for a red card should not be considered a personal cost either.
We expect that the majority of all football players have already received a red card in their career. Also, an employer (the football club) expects a football player to play every game with the necessary intensity and winner’s mentality, so it is inevitable that a football player will occasionally receive a yellow or red card resulting in a corresponding fine.
Based on these arguments, we do not agree with the tax authorities’ position to consider these fines as a taxable benefit in kind.
Please feel free to reach out, if you have any further questions on the topic or if you require further advice and assistance on the subject.
Sports Tax Advisor, brisk sportsReturn to Knowledge Hub
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