Employment

Transfers

What is the legal framework for individual transfers? What restrictions can be placed on individuals moving between clubs?

The employment relationship of a professional athlete is considered a special labour relation and is governed by the provisions of Royal Decree 1006/85. Subsidiary to this, there are several collective agreements that supplement this regulation for collective sports that are professional in nature (among others, football and basketball).

The main rules applicable to the employment relationships of professional athletes, established by Royal Decree 1006/85, are as follows:

  • contracts are temporary in nature;
  • the athlete has the right to terminate the employment contract by payment of a termination clause; and
  • any labour dispute between athletes and their employers should be submitted to the labour courts.
Ending contractual obligations

Can individuals buy their way out of their contractual obligations to professional sports clubs?

The Spanish system of transfers is, despite being founded in 1985, very novel because of the inclusion of a mechanism for the termination of contracts (termination clause), which, in practice, means the player is not dependent on the exclusive will of his or her employer for a transfer to another club. In addition, it establishes the athlete’s right to a 15 per cent share of the financial compensation established in his or her transfer contract.

The biggest problem arising from the possibility of paying for one’s freedom by paying the termination clause is that clubs tend to include in their contracts exorbitant amounts of money in the clause, although players can go to the labour courts to reduce such amounts.

Welfare obligations

What are the key athlete welfare obligations for employers?

The main such obligation is the insurance of the salaries established in the contract in the event of injury, even of long duration, throughout the entire term of the contract, as laid down in different collective agreements. The social security payable by the worker is limited to a low wage base (around €4,000), which means that there are no excessive social security charges for the player, with the club being responsible for social security contributions.

Young athletes

Are there restrictions on the employment and transfer of young athletes?

The main limitation is the absolute prohibition on contracting players under the age of 16. For athletes between 16 and 18, the signature of the parents or legal guardians will be required for the formalisation of an employment contract.

In addition, according to the case law of the Spanish Supreme Court, the player is free to cancel contracts signed before the age of 18 that are believed may infringe upon his or her rights and professional future.

What are the key child protection rules and safeguarding considerations?

See 'Are there restrictions on the employment and transfer of young athletes?'. We should recall the Supreme Court ruling of 5 February 2013 (Baena case), which states that:

The power of representation of parents, which arises from the law and serves the best interests of the minor, cannot be extended to those areas that involve a manifestation or presupposition of the development of the child’s free personality and that can be carried out by the child himself, such as a decision on his or her professional footballing future that can clearly materialise at the age of 16.

Club and country representation

What employment relationship issues arise when athletes represent both club and country?

The main issue is that the Sport Law (1990) establishes the obligation of athletes to represent their country. This provision is of dubious constitutionality, as it may infringe the constitutionally recognised right to freedom of speech.

Selection and eligibility

How are selection and eligibility disputes dealt with by national bodies?

Selection and eligibility criteria for Spanish athletes at the Olympics and World Cup are the sole responsibility of the different national coaches of each sport. For certain sports there are minimum requirements established by the national federations. Once these minimum requirements have been reached, the selection is made exclusively at the judgement of the federation and corresponding coach, with such a wide degree of discretion that makes it very difficult to challenge them. In any case, any dispute would be brought before the jurisdictional bodies of the federation and ultimately decided by the High Council of Sport.

What are the key taxation issues for foreign athletes competing in your jurisdiction to be aware of?

There is currently no specific tax regime applicable to foreign athletes competing in Spain.

However, it should be borne in mind that, depending on the exact date of arrival or departure, the remuneration obtained in Spain, and the years of entry or departure, an athlete could be taxed as a non-resident under non-resident income tax. This tax provides for a maximum rate of 24 per cent.

Tax rates for those resident in Spain can reach 52 per cent depending on the Autonomous Community in which the player resides. It is important to review the cost of the wealth tax in Spain, which can amount to up to 2.5 per cent per annum of the player’s total assets.

Special attention should be paid to the tax treatment of any income on a player’s image rights being received by a company based either in Spain or abroad, as such income is generating a large number of lawsuits with the Spanish tax agency. Likewise, the Spanish tax agency is questioning the nature of the payments made by clubs to athletes’ intermediaries.