REFORM OF FIFA’S PLAYERS’ AGENTS REGULATION SYSTEM

The topic of Sports Law is quite interesting and new for me. Since 2013, I have been involved in advising a company about certain transactions regarding the intermediation in the transfer of football players. These transactions fall under the scope of regulation of the Fédération Internationale de Football Association (FIFA).

New regulations on working with intermediaries replaced the FIFA Players’ Agents Regulations that have been so far regulating these activities within the transfer of football players. These new regulations introduce a new approach based on the concept of intermediaries and came into force on April 1st, 2015.

The immediate consequence is that now, individuals and companies wishing to conduct any intermediary activity as defined by FIFA Regulations, will be able to do so without being FIFA Registered Agents (in fact this register will no longer exist).

These changes have as key elements:

a) Transparency: full disclosure and publication of remuneration made to intermediaries as a result of transactions involving football players.

b) Protection of minors: non-payment of commission if the player concerned is a minor.

c) Payment of intermediary fees: the regulations recommend that fees to be paid to intermediaries are limited to 3% of the player’s gross basic income or value of the transfer and that there is full disclosure on these payments, identifying the intermediary, the paying entity and the percentage paid to the intermediary.

The new approach does not regulate the access to the activity. It provides a framework for tighter control and supervision of the transactions relating to transfer of football players in order to enhance transparency.

This approach includes:

1. a set of minimum standards to be introduced by the Football Associations of the FIFA Member Countries; and 

2. a registration system for intermediaries who represent players and / or clubs in concluding: (i) employment contracts and (ii) transfer agreements.

3. the deposit before the association system of contracts concluded between intermediaries and players or clubs. This includes renegotiation of an employment contract.

Regarding the above points, the only Football Association that has so far included these new FIFA recommendations is the English. These changes will have retrospective effect, hence, any transaction involving English football players and / or clubs and the intermediary involved (regardless the nationality) will also have to be registered before the English Football Association.

In this sense, the registration system for intermediaries, as mentioned, will be open to individuals and companies. Individuals wishing to register a company as intermediary will have to register themselves first in order to have access to register the company.

Registration will involve the payment of fees and annual renewal  (500 GBP + VAT registration fee and 250 GBP +VAT for the annual renewal, in the case of England). The English registration system is on-line on the following link: https://wholegame.thefa.com

In my opinion, foreseeable consequences of the implementation of these new FIFA recommendations by Member States Associations are not only the full disclosure of intermediaries’ details, remunerations, contracts, etc., but also the possibility that Football Associations will share with national Tax Authorities, following the worldwide trend on transparency.

SLR

Understanding Tax Havens

Tax havens are also known as financial centers, secrecy jurisdictions, and offshore jurisdictions, among other given names. Tax havens can be whole countries, certain administrative dependencies of bigger countries, special tax regimes within a country’s tax system or even some areas within countries boundaries. In fact, and quite surprising is that several experts and professionals among the tax industry state that the City of London is a tax haven itself.

These territories and countries offer to foreign investors an environment with zero or nominal taxation which is usually coupled with a reduction in regulatory or administrative constraints.  The activity is usually not subject to information exchange because, for example, of strict bank secrecy provisions.

Having said the above, there should be made a distinction between countries that themselves are tax havens and those that can have, within its taxation systems, a potentially harmful tax regime.

This latter countries are those able to finance their public services with zero or nominal income taxes, i.e. which raise significant revenues from their income tax but whose tax system has features constituting harmful tax competition.

On the other hand, countries that deliberately open themselves as a refuge for non-resident investors to escape from tax liability in their country of residence.

In the latter case, these countries are actively contributing to the erosion of income tax revenues in other countries.  For that reason, they are very unlikely to join the OECD and worldwide efforts in curbing harmful tax competition. 

By contrast, in the first case, a country that has significant amount of revenues which are at risk from the spread of harmful tax competition, it is more likely to agree on concerted action to curb this practices.

In order to identify either a tax haven or a potentially harmful tax regime, it is necessary to conduct an evaluation.

The absence of tax or a low effective tax rate on the relevant income is the starting point of any evaluation. 

Zero or only nominal taxation combined with the fact that a country offers itself as a place, or is perceived to be a place, to be used by non-residents to escape tax in their country of residence may be sufficient to classify that jurisdiction as a tax haven.  Similarly, zero or nominal taxation combined with serious limitations on the ability of other countries to obtain information from that country for tax purposes would typically identify a tax haven. 

Regarding those preferential tax regimes, some key factors, other than zero or low effective tax rates on the relevant income, include: whether the regime is restricted to non-residents and whether it is otherwise isolated from the domestic economy i.e., ring-fencing, non-transparency and a lack of access to information on taxpayers benefiting from a preferential tax regime.

Another key factor to identify a tax haven is the absence of a statutory requirement of substantial activity to be performed in the country. This lack of requirement will suggest that this  jurisdiction may be attempting to attract investment or transactions that are purely tax driven. These transactions may be booked in the substance-less jurisdiction  without the requirement of adding value so that there is little  or zero real activity, i.e. these jurisdictions are essentially “booking centers”.

SLR