Saturday, December 3, 2022

Granit Xhaka accepts pay cut to depart Arsenal and join Roma.

Granit Xhaka accepts pay cut to depart Arsenal and join Roma.

Granit Xhaka seems to be taking a huge pay cut to leave Arsenal and sign for Jose Mourinho at Roma but will profit from a tax break called the ‘brain return’.

At Arsenal, Granit Xhaka earns £5.2m-a-season. That’s £100k-per-week.

If reports from Italy are to be believed, Xhaka will earn €2.5m, plus bonuses, in Rome. Turning to sterling, that’s £2.17m-a-year or, if you prefer, £41k-per-week.

That’s a cut of 59%!

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That seemed quite steep so examining it might have something to do with the differing tax rates in the two nations. The top bracket in the UK is 45%, meaning that Xhaka only ever got to take home £2.66m (£51k-per-week) but the top rate in Italy is not much different at 43%.

Italy, however, have a special tax break for top athletes under what they call the ‘brain return’, the absurdity of this applying to Xhaka not being lost on me.

People qualified for the ‘brain return’ generally only pay tax on 30% of their salary, but the exception for sports players sits at 50% (so Xhaka will pay 43% on 50% of his salary rather than on all of it). Handy for Xhaka, the tax break lasts five years – the same length as his contract.

It still factors out as a cut, but it’s not as harsh as it first seems. It means, if my maths are correct, that Xhaka should take home around £32kpw at Roma.

No uncertainty, the difference between this and the £51kpw he took home at Arsenal will be made up with bonuses.

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Granit Xhaka accepts pay cut to depart Arsenal and join Roma.

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