Filenews 25 August 2024 - by Eleftheria Paizanou
Once again, the state turned a blind eye and did not implement the otherwise strict provisions of the Debt Repayment Plan of football clubs.
In fact, the state did not activate the measures provided for in the plan, despite the fact that football clubs have not complied with what was agreed.
Specifically, football clubs/companies have not only failed to pay the accumulated debts (tax and social security contributions) amounting to €32.2 million, but have also created new debts to the state (only the additional tax debts are €4.8 million). Once again they were given an indulgence after being granted a new grace period.
The measures to be implemented
According to "F" information, a few weeks ago the Ministry of Finance granted the relevant certificates to the unions / companies, giving assurances that they comply with the provisions of the new plan, in order to avoid getting into adventures. That is, that they have paid all the instalments within the schedules. Something they did not actually do.
However, if the provisions of the plan were applied to the letter and the measures were activated, points would have to be deducted from the league leader board. Also, according to the plan, those who did not comply risked relegation, a transfer ban and exclusion from European leagues.
They were covered by the increase in betting tax
The fact that the State has violated the provisions of the plan is evident from the participation of Cypriot teams in international organizations but also from the transfers that took place. Well-informed sources told "F" that the reason new certificates were given to the clubs/companies is due to the government's intention to increase the tax on betting.
The relevant bill, which is pending in the Parliamentary Committee on Finance, provides for an increase in the percentage of net earnings from betting paid by the CSO to the CFA and football clubs, from 1.5% to 3%, money that will be used to pay off the clubs' debts to the state. The bill is expected to be approved by the plenary of the Parliament when it resumes its work from the summer recess.
It should be noted that when the competent committee reaches the final text of the bill, three months before it is brought to plenary, it must notify it to the European Commission to determine whether it complies with the European directive.
An exceptional certificate was given
As we were told, unions / companies, during the contacts they had with the competent authorities, put forward this bill as an argument (to get the certificates), with the Ministry of Finance considering that the granting of the exceptional certificate is justified.
A government source, speaking to "F", said that the Ministry implemented the provisions of the plan as it has the right to proceed with the exceptional issuance of relevant certificates if and when requested, so that clubs are harmonized with the criteria of the European Football Federation (UEFA) and do not risk sanctions.
According to the provisions of the latest plan, every six months the CFA must request certificates from football clubs that they have complied with the financial criteria, through the repayment of their debts to the state and to the players.
A few weeks ago, the Ministry of Finance forwarded to Parliament a list of additional tax debts related to income tax and VAT accumulated in one year by 14 football clubs/companies out of 19. In fact, five clubs, according to the report of the Audit Office, had not paid a single instalment to the State as of May 2023, resulting in the total outstanding until July 3, 2024 (instalments and current) amounting to €4.8 million, which was added to the total long-term debts of football clubs/companies, amounting to €32.2 million.
Initially, it was agreed to pay 168 monthly instalments
With the latest revision of the plan between the two parties, the coverage period of the previous plan was extended, with the inclusion of overdue tax debts of the period 1.4.2021 – 31.3.2023, without granting additional reliefs in the form of impairment in interest and charges.
Provision was also included to reduce the debt repayment period to 168 monthly instalments. The plan has a duration of 15 years and a basic condition for the clubs to participate in it was not to create new debts.
Strong concerns from the Audit Office
In its report, the Audit Office expressed strong concerns as to whether the project would ultimately achieve its original objective of repaying debts. "We expressed serious concerns as to whether the implementation of the new plan will achieve the target of repaying the amounts due after 165 months, i.e. by June 2037, since already, from the first year of its implementation, there has been inconsistency on the part of the unions/companies," he stresses.
At the same time, it does not hide its concern regarding the successive decisions of the Council of Ministers, which include new debts in the respective repayment plans, although in previous decisions it was a prerequisite, for the granting of repayment facilities, that the unions/companies would under no circumstances create new debts. In fact, he stresses that in such a case the unions/companies would be excluded from the plan.
At the same time, the Audit Office claimed that the views of the Ministry of Finance were sought, but did not take a position.
Finally, in its report, the Audit Office called on the Ministry of Finance to immediately notify the plan to the Commissioner of State Aid Control for approval. Something the Treasury finally did last December.
