An unsporting tax
Pressure by the European Commission has forced the Government to change key aspects of the tax relief that sportspersons may claim on their retirement. But for one sport - rugby - the impact of the change is decidedly mixed: a negative development for the professional game in Ireland, albeit a positive financial one for some players.
The legal change, published in the Finance Bill, provides top players, who are close to the end of their rugby careers, a strong financial incentive to serve out their pre-retirement years in the pay of wealthy French or English clubs.
When Charlie McCreevy as minister of finance in 2002 introduced the tax concession, allowing all sports professionals - including jockeys, golfers, boxers and others - a 40 per cent tax rebate on their Irish earnings from that sport for ten years preceding their retirement, rugby was always seen as the main beneficiary of the tax break.
In fact the tax relief helped to create the financial conditions for what became - both for club and country - Irish rugby’s golden age. Irish players had a strong financial incentive to stay, and play, in Ireland. And since 1999, teams from three provinces (Ulster, Munster and Leinster) have won the Heineken cup to become European champions, and Ireland, in 2009, for the first time in six decades won the Six Nations championship - the Grand Slam.
The proposed change will enable those retiring from their sport to reclaim on Irish income earned in any 10 of the 15 years before they quit. And they may do so, even if not based in Ireland on retirement.
Johnny Sexton, reputedly one of France’s highest paid club players, can benefit from his high earnings there, without risking the loss of a tax rebate on his Irish earnings. And other players, given the uncertainty surrounding the future of the Heineken cup, may be tempted to follow Sexton’s lead.
A tax incentive for players to stay now looks like a becoming a tax incentive to go - at least for some of our most experienced players.