Budget cap: more news expected in Singapore
Immediately after Monza, the FIA put an end to speculations about potential breaches of the spending cap by one or more teams in 2022. All ten teams were deemed to be ‘compliant,’ with no cases of minor violations (Red Bull) or procedural errors (Aston Martin), as seen 12 months ago. According to Joe Saward, there might be discontent in Singapore regarding the Federation’s inspection results.
In his latest blog post, the journalist dedicates a section to the fact that an F1 team can benefit from tax advantages.
“With regards to the Cost Cap, an F1 team might have received tax incentives from its government, allowing for five years of reduced taxation for highly skilled foreign workers,” writes Joe Saward. “This means that the team can offer (and declare) a lower salary compared to rivals, but the employee receives more money due to tax benefits.” These words may recall the ‘growth decree’ exploited, for example, by Serie A football clubs (and others) during transfer windows. The team in question could, therefore, be Ferrari, for which the ‘growth decree’ could offset the fact that the average labor cost in Italy is significantly higher than in England.
On the website of the Italian Revenue Agency, under the ‘benefits for those moving their residence to Italy’ page, it is stated: “The facilitated regime for ‘expatriate workers’ is intended for employees and self-employed workers who move their residence to Italy. The facilitated treatment also applies to business income generated by expatriate workers who start their activity in Italy from the fiscal year following that in progress on December 31, 2019. It provides that for five years, the income from dependent work (or assimilated to it) and self-employment income produced in Italy is subject to taxation equal to 30% of the amount or 10% if residence is taken in one of the following regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, Sicily.
The regime is extendable for another five years under certain conditions. For the extension period, the facilitated income will contribute to the formation of the tax base for 50% of their amount (10% in the case of workers with at least three dependent children).”
Budget cap and taxation, a dilemma also for Alessio Alunni Bravi
The fact that the budget cap applies to teams with different tax regimes based on their ‘nationality’ is a problem emphasized by Alfa Romeo’s Team Representative Alessio Alunni Bravi: “It is very important for us to recognize the difference in labor costs between Switzerland and England, which currently stands at around 35-40% of average salaries,” says Alessio Alunni Bravi. “In order to grow as an organization, some form of indexing needs to be found. Otherwise, a structure like ours with six hundred people would have a gross salary bill equivalent to that of a team with nine hundred employees.”
Federico Lodi, the head of the budget cap control team, is well aware that the ‘rules’ for teams change depending on their location: “The relevant costs start with those incurred by the teams. Then there are exclusions, but also adjustments, which can be of different kinds. One of these serves to eliminate macro-differences between jurisdictions. Labor costs, for example, are much higher in Italy than in England. Beyond a certain limit, social security contributions can be excluded. Taxation is also different in each jurisdiction. We have measures to try to equalize everything, but it is impossible to eliminate everything.”
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