An amendment in the 2024 draft budget seeks to grant tax exemptions to international sports federations, a move that raises concerns in the context of France's limited fiscal flexibility.

Published today at 12:05 pm (Paris), updated at 12:07 pm. Read in English Share

Since his election in 2017, President Emmanuel Macron has prioritized enhancing France's appeal as a cornerstone of his economic policy. This approach hinges on a series of tax and regulatory reforms aimed at fostering investments and job creation within French borders.

This commendable endeavor is poised to take on new significance with the goal of luring international sports federations, as recognized by the International Olympic Committee. Members of Macron's Renaissance party have discreetly proposed an amendment for the 2024 budget bill currently under parliamentary discussion and approval. Their plan is to extend a welcoming hand to approximately 30 federations, exempting them from corporate taxes, property taxes, and corporate value-added taxes. Furthermore, the employees of these federations based in France would enjoy income tax exemptions for at least five years.

The primary objective of this provision is to cultivate favor with FIFA, the wealthy global football governing body, which currently has its headquarters in Zurich, Switzerland. In 2021, FIFA established a branch in Paris with ambitions to expand its presence by increasing its workforce from around 20 to approximately 100 employees. However, without a more favorable tax environment, this branch may relocate from France.

The proposed tax relief raises several concerns. From a legal standpoint, the Council of State cautioned in September that this amendment might infringe upon "tax equality." To circumvent this obstacle, lawmakers attempted to limit the tax benefits over time. Nevertheless, the Constitutional Council may also assess the legality of this measure.

Race to the Bottom

From a purely fiscal perspective, the timing of this amendment is questionable. FIFA's current employees pay taxes in Switzerland, while the organization benefits from a tax rate of 12%. It seems incongruous for France to engage in a race to the bottom with a country like Switzerland, particularly to benefit employees who are, for the most part, very well compensated, and an organization that generates billions. Given France's constrained fiscal maneuverability, this decision appears to be a political misstep.

Lastly, if the objective is to boost France's international standing by welcoming FIFA to Paris, it is not entirely convincing, considering the federation's tarnished reputation. FIFA's president, Gianni Infantino, is currently facing two separate criminal investigations in Switzerland. In Paris, public financial investigators are probing potential corruption during the allocation of the 2022 World Cup to Qatar, which has led to indictments and an international arrest warrant for a former FIFA executive.

With FIFA's unbridled expansion drive aimed at revenue generation, allegations of cronyism, opaque governance in the allocation of competitions, and its questionable stance on defending sporting values and human rights, FIFA hardly appears as a guest capable of enhancing France's prestige. All things considered, it is reasonable to conclude that the Renaissance parliamentarians' amendment carries more risks than benefits. Photo by Bic (Wikimedia Commons), Wikimedia commons.