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Spanish Buyout Clauses: An Update - Could They Help Paris Saint-Germain Sign Neymar?

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A look at how the change in rules impacts Neymar’s potential transfer

Deportivo Alaves vs Barcelona - Copa Del Rey Final Photo by David Ramos/Getty Images

Just over a year ago, I took a detailed look at how buyout clauses operated in Spain. In short, only a player may activate the clause. This meant that any potential buyer had to send the transfer money to the player, which was then subject to taxation in the same manner as salary. With Spain’s 48% top income tax bracket, that meant any buyer outside of Spain would have to pay nearly double (1.92 times) the original fee - which heavily favored any team that refused to sell.

This all changed with an alteration of taxation laws in Spain, in October 2016. To put it simply, the income received from the buying team is no longer constituted as income tax. Instead, it’s categorized as a capital gain. Jorge Pecourt, head of sports at Spanish law firm Cuatrecasas, told City A.M.: “That difference is very important because now when a player fills in his personal income tax, he can point to this capital gain as a loss because he paid the money to his former club. You can not offset as a salary as a loss, but you can if it’s defined as a capital gain.”

Pecourt described the impact of the new legislation on the buying and selling teams, as well, via Sport Witness. “From this moment on the transfer market has changed positively for buying clubs and negatively for those who were not willing to negotiate the transfer of their players, relying on the termination clause and the tax toll that came with their payment.”

To make the ruling more relatable, we can look in terms of the recently rumored transfer of Neymar from Barcelona to Paris Saint-Germain. Under the old rules, any money Neymar got from PSG to activate his clause was subject to income tax. This meant Neymar needed to have €222 million after taxes were accounted for. Using the multiplier mentioned above, this meant PSG would need to pay Neymar €426.9 million, in order for him to have enough money to activate the clause. While the original fee may be eye popping, and scare off most teams, the post-tax value surely scared everyone away. However, with the new ruling in place, PSG no longer have to pay the additional taxes. They don’t have to pay an additional fee to get around the tax, like Bayern did with Thiago, either. They just have to pay €222 million fee stipulated in Neymar’s contract.

While this doesn’t guarantee a transfer is imminent, it does make the move substantially easier for both Neymar and PSG - if the player does decide to leave.