Inter's Transfer Dilemma: Choosing Between Buchanan and Taremi Amid Tax Break Changes

The Italian football world is reeling after authorities confirmed that the "growth decree" tax break will be abolished starting January 1, 2024. The Italian Football Federation's request to extend the benefit until the end of February was denied, leaving Serie A clubs in a state of turmoil. Contracts signed before the tax break is abolished will still benefit from the tax break, but any new signings or contract renewals post-January 1 will no longer qualify. This shift means a significant increase in financial burdens for Serie A clubs.

Unlike the Premier League, where players receive their salaries and handle their own taxes (often reported as gross weekly wages by the media), Serie A clubs handle tax payments directly. Italian media typically report player salaries as net figures. The clubs bear the additional tax costs, making the end of the tax break a substantial financial hit. Consequently, the abolition of the tax break means clubs will face increased fiscal pressures. Many in Serie A are lamenting this change, though some dissenting voices exist.

For instance, Lazio's president Claudio Lotito noted that the hardest-hit clubs would be Juventus, AC Milan, and AS Roma, not Lazio. Meanwhile, prominent agent Federico Pastorello argued that the end of the tax break would push Italian clubs to focus more on domestic talent. He pointed out that leagues like Ligue 1 and Bundesliga manage without tax breaks and still function effectively.

Impact on Inter Milan

The tax break’s abolition will impact Inter Milan, though perhaps slightly less than AC Milan, which relies heavily on data-driven signings under RedBird Capital. Nonetheless, Inter will still face significant challenges. The club had been preparing for this scenario, but it will still affect player contracts and negotiations.

Renewals and New Signings

Henrikh Mkhitaryan's contract renewal is an immediate concern. Inter had planned to announce the renewal around January 6, but now they need to finalize and register the contract before January 1 to retain the tax benefits. Missing this deadline would cost the club millions.

Similarly, Denzel Dumfries' situation is delicate. Inter aims to renew contracts for both Dumfries and Federico Dimarco. While Dimarco’s renewal conditions include approximately €4 million plus bonuses, Dumfries demands €5 million net, justifying his higher request by the tax break benefit. With the tax break abolished, meeting Dumfries’ demands would result in a significant financial burden (equivalent to a gross salary nearing €10 million, or around £167,000 weekly as per English media standards). Should Dumfries maintain his stance, Inter might be forced to consider selling him post-season.

Young talents like Sebastiano Esposito and Mattia Zanotti, currently out on loan, may see increased roles upon their return, providing cost-effective rotational options. Inter’s future strategy is clear: to manage costs effectively, the club will continue to lower the pre-tax wages of backup players. High-earning players like Marcelo Brozović, once they lose their starting spots, will likely depart, while low-cost backups like Kristjan Asllani, earning just over €1 million gross annually, will remain crucial due to the difficulty of finding equally competent replacements at such salaries.

Building the Squad Amid Financial Constraints

Without the tax break, Inter’s approach to building a deep squad will face significant hurdles. Previously, the club could bolster its rotation with high-salary players benefiting from the tax break, such as Mkhitaryan and Marko Arnautović. Arnautović’s €300,000 net salary might seem high, but his gross salary of €393,000 is less than last season’s backup goalkeeper Samir Handanović (€460,000) and comparable to Stefano Sensi’s current salary (€370,000). Without the tax break, it will be challenging for Inter to find such high-quality players for their rotation.

Inter can no longer afford high-salary backup players and must focus on lower-wage talents or recall loanees to fill these roles. The abolition of the tax break exacerbates this issue, potentially making it Inter’s primary challenge moving forward. In the past, the club signed tax-benefit-eligible players to strengthen the bench. For instance, when Mkhitaryan joined, he was initially a rotational player, enjoying a tax break, with his gross salary significantly lower than the starters. Similarly, Arnautović’s salary structure was manageable due to the tax break. Without this financial aid, Inter will find it hard to attract such players for rotational roles.

Transfer Market Challenges

The January transfer window presents immediate challenges for Inter, especially with the fans' desire for reinforcements. Many supporters hope for the acquisition of Tajon Buchanan to strengthen the right wing-back position, especially given Juan Cuadrado’s potential season-ending surgery. There is also a clamor for a new striker, with Mehdi Taremi being the most favored candidate. However, as Gazzetta dello Sport points out, signing both Buchanan and Taremi in the winter window is impossible due to Financial Fair Play (FFP) constraints, cash flow, and wage budget limits, compounded by the non-EU player quota.

Serie A clubs can only sign two non-EU players per season, with the second slot having additional prerequisites. Inter has already used one slot with Alexis Sánchez's return, leaving one remaining. Signing Buchanan would preclude a simultaneous move for Taremi, forcing Inter to choose one.

Strategic Decisions

Currently, Inter leans towards signing Buchanan. The club views strengthening the wing-back position as a priority. This decision means Taremi’s potential transfer would be deferred to the summer window. The club must navigate these financial and regulatory constraints carefully to optimize their squad without breaching FFP regulations or overspending on wages.

Inter's management faces tough decisions as they balance financial prudence with the need to remain competitive. The abolition of the tax break amplifies these challenges, necessitating a more strategic approach to transfers and contract renewals. The focus will likely shift towards nurturing young Italian talent, managing wage bills, and making astute signings within regulatory limits.

In summary, Inter Milan, like many Serie A clubs, is entering a period of financial adjustment. The abolition of the tax break represents a significant challenge, necessitating careful planning and strategic decision-making. The club’s ability to navigate these changes will be crucial in maintaining competitiveness while managing fiscal responsibilities effectively.