Taxation of tansfer income for Footbal Clubs

Date 28 sep. 2010


On September 3, 2010 the Danish Supreme Court determined that a football club shall be subject to taxation of the transfer fees it receives when selling a soccer player to a different football club.



Transfer income

It is illustrated in the judgment that by entering into a contract between a soccer player and a football club, time-barred and irrevocable conditions of employment are established. In the period where the contract is in force, the player cannot undertake other work without the employer’s previous consent.   


When a football club signs an agreement with another club about transfer fee for a player, the original football club accepts that the player is released from the original contract ahead of time, so the player is free to conclude a new contract with a different football club.


Transfer fee is a fee to the original football club from the club that wants to acquire the player. In return of the transfer fee the soccer player is released from his contractual obligations to the original football club.



The legal background

Generally, all annual revenues are subject to taxation. However, there is an exception where the revenue derives from sales of the taxpayer’s own property.


In the Supreme Court’s judgment, the question is whether transfer fees should be considered normal income, subject to taxation, or revenue deriving from sales of the football club’s property.


The Danish Supreme Court, the National Tax Tribunal, and the Eastern High Court acceded to the view of the Danish tax authorities that transfer income shall not be considered revenue deriving from sales of the taxpayer’s property, which are tax exempt, but compensation to the original football club for resolving the soccer player from his/her contractual obligations before the contractually specified termination date. The compensation was, pursuant to the Supreme Court, the Eastern High Court, and the National Tax Tribunal, perceived as a common property resource, which forms a part of the of the club's operational activities in order to optimise the sporting and economic achievements, and should thus be taxed along with the football club's other income.


Expenses in connection with the payment of transfer fees can be appropriated in the period when the contract is in force. If the contract is terminated before the contractually specified termination date, inappropriate amounts can be appropriated.



The significance of the judgment

The judgement is of significant fiscal importance for sports clubs that have income deriving from transfer fees. It was a crucial issue during the proceedings, whether the transfer fees could be considered equal to revenues deriving from sales of the taxpayer's own property and therefore should be tax exempt, or whether the revenue should be equated with the club's other income from sale of tickets, etc.


The ruling is of fundamental and practical importance for all sports clubs, which receive income from transfers.



If you have any questions or require additional information on the judgment contact Partner, Adjunct Professor Jakob Bundgaard ( or Attorney Pernille Nørkær (  


The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis for decisions or considerations.