Filenews 22 December 2024 - by Eleftheria Paizanou
The Tax Department is ready to freeze bank accounts and place a MEMO on the assets of football clubs, for those of them that do not pay their tax debts to the state.
By the end of the year, football clubs will have to repay the €4.1 million in tax debts they created following the implementation of the new tax debt repayment plan, which will apply from May 2023.
Essentially, these are the delayed tranches of the last plan. Some of the companies involved in the plan did not pay a cent during its 18-month implementation. Others paid a certain number of instalments and others paid less than they had pledged to the state to pay.
Some of the football clubs, although they cut income tax from players and other workers, did not pay the state the amounts that were cut. Also, there are cases where they have not paid the prescribed VAT to the state. With the immediate payment of these debts, football clubs will continue to participate in the plan to settle their total debts, which amount to €35.5 million. This is because a prerequisite for participating in the plan is the non-creation of new debts.
Criminal prosecutions and recovery measures
The placement of MEMOs and the freezing of football companies' bank accounts are included in the collection measures implemented by the Tax Department since 2014. It should be noted that, according to the law, the tax collectors of the department, utilizing the tools at their disposal, can proceed to the placement of a lien on real estate without a court order (MEMO) and the seizure of bank accounts (garnishing of bank accounts).
At the end of the year, the ultimatum given by the Commissioner of Taxation, Sotiris Markides, to football clubs that have not fully complied with the provisions of the plan ends. The main conditions of the 2023 plan, with which union compliance is required, are the timely payment of the specified monthly instalment of the plan from July 31, 2023, the immediate payment of current debts arising after April 1 and the timely submission of all foreseen tax returns.
In fact, according to the letter forwarded by the Commissioner of Taxation on November 12 to the football companies, he warned them that otherwise their inclusion in the scheme will be cancelled, resulting in the reinstatement to the due amount of all the deductions granted and the taking of collection and judicial measures against them, in accordance with the relevant provisions of the legislation of the Tax Department.
In the Legal Service
According to Fileleftheros' information, on January 15 the Tax Department is expected to send all data to the Legal Service in relation to the unions that will continue to owe, asking them to receive instructions from the Attorney General on how to manage them.
In particular, one option that will be considered is the criminal prosecution of directors of football companies, and this offence in some cases carries prison sentences. It should be noted that for criminal cases either a penalty is imposed during the trial and settlement of payment, or an out-of-court settlement takes place at the same time as compliance (submission of statements and/or creation of a timetable).
The other option before the Attorney General is the application of the collection measures of the Tax Department.
They are waiting for the President of the Republic
In addition to the procedures initiated by the Tax Department, football officials of some clubs are lobbying hard for political intervention to revise the latest plan.
This follows the increase in betting tax to 5% on the net earnings of terrestrial and online betting service providers. The proceeds from this tax are distributed to the Cyprus Sports Organisation, which in turn allocates it to the Cyprus Football Federation for the purpose of supporting football clubs of various categories and their academies, but also for the payment of the debts of some clubs.
Football officials say betting revenues will increase further, which will boost the payment of instalments agreed with the Treasury under the latest plan. Although the Ministry of Finance and the Tax Department say they will not show tolerance, in a recent announcement they had stressed that "the obligations of companies remain unchanged, which they are expected to meet, so that there are no further undesirable effects, and any debts to the state are not written off."
After the holidays the new "gifts''
According to information provided by "F", developments regarding the request of the football clubs are expected to take place after the holidays. Behind-the-scenes discussions will continue between Christmas and New Year so that some sort of arrangement can be made.
One of the demands put forward by the clubs is to increase the number of tranches of the plan, which currently stands at 168 to cover the additional debts they have created.
In addition, some other arrangements are being considered to satisfy all project participants. In addition, the clubs believe that with the revision and review of the provisions, the plan will be put on a new footing. However, as we have been told, any decision will come from the Presidential Council.
The Government does not want the changes to the plan to be such as to provoke public sentiment as there will be reactions from public opinion. Already, there is a moral issue with the treatment of the clubs, so in case there are any changes to the plan, we will try not to make them unbalanced.
It should be noted that in case the debt repayment plan is amended, it will have to be approved by the Council of Ministers, whose next meeting is scheduled for early January. That is, any decision taken will be in the new year.
They saved them 10 times – Finance says there won't be an 11th
It is recalled that over time, the state has given ten times absolution to football clubs, implementing various plans, with a freeze on interest and charges, cancellation of debts and the granting of financial assistance.
Such regulations have been in place since 1998 and due to the tolerance shown by the respective governments, they fell on deaf ears. It should be noted that the state often turned a blind eye so that football clubs would not get into trouble in relation to UEFA criteria.
When clubs have debts to the state, they face the risk of points being deducted from the league table, with relegation, a transfer ban and exclusion from European competitions. Despite their non-compliance with the various plans, in the past the competent ministry issued an exceptional certificate to the unions for compliance with the debt repayment plan to the state. Something that the Ministry of Finance does not intend to do again.
