The costs of buying a football player from Argentina

This blog will briefly examine the charges, taxes, costs and levies typically associated with a football player's transfer from an Argentine to a foreign club, which can – perhaps surprisingly – amount to up to 25.7% of the total transfer price for a foreign club (and can be even more for a domestic team).

This is an important issue because, in the author’s experience, foreign clubs often do not consider these inbuilt levies at the beginning of negotiations, maybe because they do not have anything similar domestically. However, almost every South American nation has significant costs and levies on transfer fees, the logic being that the exporting nation charges as much as possible at the time of the transfer because large sums of money are involved and it is potentially the last chance to levy charges and taxes before the player leaves the country for good.

What levies are there in Argentina?

The 25.7% levied on the total transfer price can be approximately disaggregated into the following charges.

The player’s share

Firstly, 15% of the transfer price goes to the player pursuant to the national Collective Bargaining Agreement (CBA) and the "Professional Player's Statute", the federal law 20.160. Article 8 of the CBA (55/2009) provides:¹

“The professional player´s contract might be subject, during the term of its validity, to a transfer to another club, with the express consent of the player. In such case, the player shall be entitled to – at least- 15% of the gross amount of the transfer, be it temporary or definitive, and the payment of such percentage shall be responsibility of the transferring club by depositing such amount at the Professional Players´ Union."

Almost every South American federation has a similar percentage assigned for the player in a transfer (it usually ranges from 10% - 20%).² As a labour right, in Argentina, such percentage cannot be waived by the player in advance (in contrast to other nations, such as Spain, were the percentage can be waived).

Social Security Taxes

7% relates to social security taxes. Pursuant to an agreement reached between the Argentine tax authorities and Argentine clubs more than a decade ago (known as Decree 1212/2003), social security taxes are paid by clubs as a deduction of a percentage of the transfer fees, ticketing income and TV rights revenue. The decree states:³

“These rules will apply for the payment of the social security duties to the social security systems an amount equivalent to 2% [later elevated to 7%] of the total income for ticket revenue of the games disputed by the relevant clubs in every category, plus the transfer of players and the TV rights of the tournaments disputed by these clubs in every category.”

As many clubs are currently in economic difficulties, the income generated by the sale of a player is a convenient way to arrange for the discharge of any debts that they may have with the National Social Security System and suspend ongoing enforcement proceedings. Article 1 of the decree provides:

“A collection and withholding regime is established for the payment of the personal and labor contributions to the regimens established in laws 19.032.... (social security regulations) for professional football players, medical, technical and auxiliary staff in charge of professional football squads in any category and any other employees dependent from the Argentine Football Association and clubs participating in tournaments organized by the said association in first (Primera A), second (Nacional B) and third (Primera B) division, with the Argentine Football Association acting as collection and withholding tax agent.”

So technically, the transfer itself is not taxable in a strict sense; it is a collection and withholding of social security taxes then owing at the time of the transfer.