Iparraguirre: Release clauses are clubs' tax strategy in Argentina | OneFootball

The renowned sports law attorney Carlos Iparraguirre warns that release clauses, after their popularization in Argentine football, have become one of the most complex focal points of the local transfer market.

These clauses — the lawyer clarifies — are always agreed upon mutually between the player and the club, to support the institution in case the player breaks the employment relationship unilaterally, whether when signing a first professional contract or during a renewal.

Their value is calculated based on several factors: the years of the contract, the player's salary, their age, and the cost of parting with them for the institution. It should also be noted that players can sign their first contract at the young age of 16, thus already having a millionaire clause at a young age.

In Argentina, the formal use of these clauses became popular a few years ago. But there was a case that raised the alarm in clubs, with the controversial case of Martín Bravo, where the player from Santa Fe considered himself free after not signing his contract with the Santa Fe club, allowing him to leave Colón without leaving any compensation for his former club. This departure generated a wave of reproaches and opened the debate on the need and regulation of these release mechanisms.

Taking us back to that moment, in Santa Fe it was already speculated that this outcome would happen: the forward had rejected the offer of a new contract — the previous one had expired on June 30, 2008 — he continued at the club, although he did not show up for the first three days of training either.

Despite the management's confidence in reaching a last-minute agreement, that never happened, and finally, Bravo continued his career in Mexico without Colón receiving any money for the transfer.

Although the forward had a (tacit) link after it expired and did not accept a renewal, he automatically became a free player and negotiated his card on his own. In Argentine football, there was the possibility of unilaterally extending the contract for two more years, paying 20% of the salary of the highest-paid player on the team, which arose automatically at the time of contract expiration without the parties reaching an agreement.

However, this mechanism was not recognized by FIFA and in our country, it was one of the few countries where it was used, leaving clubs in a gray area and explaining why several institutions considered starting negotiations or claims to avoid further asset losses.

The lawyer also warns of an increasingly frequent phenomenon: more modest clubs often have difficulties setting very high clauses, because if they set them too high, they must then offer salaries in line for the player to accept.

“If you set a clause of U$S 10 million — Iparraguirre exemplifies — you also have to pay a contract that supports that amount. Not everyone can do it,” he expressed to this medium.

Moreover, the specialist implies that some clubs use clauses as a fiscal strategy: “By saying that the player leaves for the value of the clause, they avoid paying certain taxes that exist in a common transfer. Also, some players have to give up to 15% for the operation to be viable.”

It should also be clarified that release clauses must be executed directly by the player, making the deposit of said amount to the club's account or the AFA if the club refuses to receive it, to be able to free themselves from the club in which they are playing.

To illustrate the magnitude of these disputes, Iparraguirre relates the Argentine phenomenon to the international case of Lassana Diarra, the former French midfielder who claims more than €65 million from FIFA. After a historic legal battle in Europe, the Court of Justice of the European Union determined that certain FIFA rules violated the principle of free movement of players, forcing a reform of its regulations.

That ruling put key points of the FIFA's Regulations on the Status and Transfer of Players (RSTP) in check, especially Article 17, which until now imposed severe compensations when a player broke their contract without just cause.

Iparraguirre warns that although the European and South American realities are very different, the principle is the same: the reservation of power by clubs to define the terms of their players' departure can lead to very costly litigation. He calls for greater regulation and transparency, especially in leagues like the Argentine one where the transfer market is rapidly growing.

At the end of the conversation, he maintains, the clauses are not a whim: “They are a contract. And like any contract, they imply obligations and responsibilities for both parties. If they are not well designed, they can cause enormous damage to clubs, players, and the very structure of national football.”

How the clause is executed in Argentine football

AFA modified the regulations due to the complexity of cases where players have the option to activate what is called a «simplified early termination clause», as long as an agreement is formalized with the club they belong to.

According to Futbolistas Argentinos Agremiados, this way the three parties involved can agree on how the clause will be paid, which can even be in installments and include sports goals to be met, which could represent additional income for the seller.

Both in traditional operations and those established by a release clause, the same mandatory percentages apply (2.5% to the Retirement Fund, 2% to AFA, and 0.5% to Agremiados) and an 8% tax according to Decree 510/23, but the payment by clause does not require the usual 15 percent to be allocated to the player.

This article was translated into English by Artificial Intelligence. You can read the original version in 🇪🇸 here.