Tel Aviv District Court Judge Yardena Seroussi rejected the appeal of former football player Maor Bouzaglo over the tax rate he must pay for the sale of his player card. NIS 40,000 legal expenses.
Buzaglo, who was previously a successful football player, played from 2011 to 2013 in the Belgian Standard Liege team. After concluding his contract with the Belgian team, the appellant became a "free agent", who is a player who is not under a contract with any team, who is allowed to sign a contract of employment with any team he desires in his services. In 2013, Buzaglo signed a deal with Hapoel Beer Sheva. Pursuant to the employment agreement, it was agreed between the parties that he will play for the team in three playing seasons, until the end of the 2015/2016 season (subsequently the term of the agreement was extended), in exchange for a monthly salary.
Simultaneously with the signing of the employment agreement, the appellant signed an "agreement for the sale of sports rights", according to which he will be paid an additional amount of NIS 1,809,000 for 50% of his "sports rights" and a year later signed another agreement "for the sale of sports rights". An amount of NIS 1,384,000 for an additional 40% of his "sports rights". Thus, in total, in accordance with the sale agreement, he sold 90% of his player card for a total of NIS 3,193,000. Buzaglo reported the proceeds of the sale as income from capital gains, which is taxable at a rate of 25%.
On the other hand, the Tax Authority argued that the proceeds of the sale constitute income from work and should be taxed in accordance with the marginal tax rate applicable to the appellant. According to them, it is not possible to sell the team the sports rights attached to the player's card without signing the deal with the same team at the same time. In return for the sale was paid to the appellant for the services he rendered to the group. Appellant was obliged to render his services due to the fact that the team held his player card and signed with him the deal agreements. The fact that the receipts were paid to the appellant through two types of agreements does not have fiscal significance for the purpose of classifying the payment paid to the appellant as income from work in his hands.
Judge Jordana Seroussi, who accepted the Tax Authority's position, noted in her decision that the consideration for the sale was paid as wages for Buzaglo's services to the group. Thus, it constitutes the introduction of work in his hand. "On the face of it, and disregarding the unique characteristics of the football industry, the matter is simple. The appellant was paid various sums, including for the sale, for agreeing to render his services as a football player to the team, for the period of the employment agreement. "Also for Hapoel Beer Sheva, the sale was paid for in order for the appellant to provide his services to the team," Judge Seroussi wrote in the ruling.
Buzaglo also claimed that the sale of the rights in his player card sold the profit potential and the risk of loss.
However, Judge Seroussi noted that it is also not clear what profit and what risk this is.
In terms of "profit", the default is that the rights pass to the team, and in any case the player is not entitled to the full future sale fee. However, the sale of the rights has nothing to do with it, "Judge Seroussi wrote, adding:" In terms of "risk", the appellant has nothing to lose: the appellant did not spend money for his rights sold, and in fact only profits from the sale in relation to the previous situation. "This is in contrast to a sale between teams, which take on chances and risks, depending on the player's increase or decrease in relation to the price they paid for him."
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