Technically, if a non-Spanish club is going to obtain the release papers from the selling club, the money has to be provided by the player. It’s a breach of contract so the player is literally buying out his contract allowing him to leave. The interpretation of the phrase “provided by” is vague and we saw this when Bayern Munich brought Javi Martinez from Bilbao. Bayern were given approval by Martinez to pay the money to the Spanish FA who act as intermediaries for these type of situations. The money was then given to Bilbao as compensation for losing Martinez. If Martinez had to pay for the clause himself, then he would be subject to income tax which could double the price.
Just to clarify, when the club meets the buyout clause, they can be subject to VAT(tax added onto the buyout clause) if it’s decided it should be applied. Who decides whether or not it’s applied I think falls at the discretion of the tax authorities. However, I don’t know with 100% certainty. In Bayern Munich’s case, the ruling was that they didn’t have to pay VAT because no services or goods were being exchanged. Some disagree with the decision and think that a VAT should been applied.
More here
http://www.trulyreds.com/20130710/why-thiagos-release-clause-is-so-complicated/
