FIFA vs. agents – what’s the score?

Back in December 2022, FIFA introduced new, stricter regulations on football agents, which were planned to be implemented from January 2023. Since then, agents in the UK and across Europe have succeeded in attempts to block this, leaving important provisions suspended. Whilst the rules navigated by agents remain in the balance, HMRC looks set to be the winner from this impasse in the new tax year, and continues to stand strong on the tax treatment of the footballers represented by these agents, as experienced by former Everton player, Baye Oumar Niasse, in his recent tax tribunal case. 

Some of the key changes proposed by the FIFA Football Agent Regulations (FFAR) included: a cap on agent fees; a halt on dual representation; and, a requirement for the footballers to pay their agent directly. The regulations also require agents to be licensed by FIFA through passing a qualification and completing continuing professional development. 

The proposed fee cap would have restricted an agent’s commission to 3% on all player annual salaries over £161,000. The proposal for players to pay their agent directly from their net salary would also likely have created a downward pressure on agent fees, as it is currently common practice in the UK for clubs to pay such fees on the player’s behalf, reporting this as a taxable benefit on the player’s P11D form. 

In November 2023, football agents in England won a ruling against the introduction of selected FFARs, including the fee cap, client pays and dual representation rules. The tribunal, commissioned by the Football Association, found that these elements are incompatible with UK competition law. This ruling, combined with similar victories by agents in Germany and Spain, has resulted in a temporary worldwide suspension of the affected FFAR provisions.  

However, certain elements of the FFAR have not been suspended. For example, the first sitting of the FIFA football agent exam was held in April 2023, with a pass rate of 52% from the 3,800 candidates that sat it.

Despite the uncertainty with the FFAR, the tax treatment of agent fees for footballers remains the same. In February this year, footballer Baye Oumar Niasse’s appeal for a tax deduction in respect of the fees paid to his agent during his time at Everton failed. The First-tier Tribunal decided that Niasse was not required to engage an agent and that the fees were not incurred wholly, exclusively and necessarily in the performance of his duties of playing football, hence the fees were not a deductible expense. This has been common practice within the industry for some years now, so it is surprising Niasse was advised to take his case to tribunal. However, whilst it is not binding on future similar disputes, it will prove valuable case law for HMRC to reference if a player makes a similar claim on their tax return in the future.

After a quiet January transfer window by recent standards, many are expecting a busier summer in the transfer market. With agents’ fees remaining uncapped and HMRC unmoved in its approach to tax deductions for fees paid by players, the effective tax burden for footballers is likely to be higher than it might otherwise have been. Combined with proposed changes to the UK’s non-domiciled individuals tax regime, which are expected to impact players who move to the UK from overseas and remain resident for over four tax years, the UK tax system could mean the Premier League starts to look significantly less attractive than competing leagues.