Tax audit for Süper Lig clubs following Osimhen transfer! Ministry takes action: Record fines on the way

Following the high-budget transfers made by leading Süper Lig clubs ahead of the new season, the Ministry of Treasury and Finance has stepped in. Tax inspectors affiliated with the Ministry have placed player transfers from abroad under the microscope. Record-breaking tax penalties will be applied to the transfer fees clubs have paid for players brought in from foreign countries.

Recently, tax inspectors have begun issuing penalty decisions, classifying payments made due to the early termination of existing contracts of players transferred from abroad as "intangible rights," and stating that these amounts should be subject to a 20 percent withholding tax (corporate tax deduction) and a 20 percent VAT.

146 MILLION VAT PENALTY!

Courts, meanwhile, have ruled for the cancellation of the withholding tax deduction within the scope of double taxation avoidance agreements regarding players mostly coming from European Union countries, while upholding the VAT penalty. In the last 5 years, the four major clubs of the Süper Lig have paid a total of approximately 730 million Euros in transfer fees, and are now facing VAT penalties reaching 146 million Euros due to these transactions.

OSIMHEN'S VAT IS 15 MILLION EUROS

In particular, Galatasaray will be required to pay 15 million Euros in VAT for the Victor Osimhen transfer currently on the agenda. Tax experts emphasize that the amount paid to players due to early departure is in the nature of compensation, not a transfer fee, and therefore should not be subject to tax.

TAX PENALTIES ARE LOOMING

According to the report by Rahim Ak from Habertürk, a challenging process awaits football clubs regarding taxes with the start of the new season. Tax inspectors affiliated with the Ministry of Treasury and Finance have begun to classify early termination fees, especially for players transferred from abroad, as "intangible rights" and are imposing 20 percent withholding tax and 20 percent VAT penalties on clubs.

While two separate tax penalties were applied to the clubs based on the Istanbul Tax Office's special ruling dated July 1, 2014, the court intervened upon the clubs' objection. The court ruled that the 20 percent withholding tax applied to players transferred from EU countries was unlawful under double taxation avoidance agreements.

THREAT OF A FIVE-YEAR RETROACTIVE AUDIT

On the other hand, the Ministry of Finance's argument that clubs are considered tax-responsible and are therefore obligated to pay 20 percent VAT because the counter-club where the transfer was made is not a full taxpayer has been accepted. After paying this VAT, clubs can offset it against the VAT they will pay in the same period.

However, the right to a 5-year retroactive audit under tax legislation means that if clubs cannot deduct the VAT differences from past periods, they could face VAT penalties amounting to approximately 100 million Euros. This poses a major financial risk, especially for the big clubs.