The cost to Toulon of hiring Jonny Wilkinson is set to climb even higher in January after a French Government clampdown on a tax loophole that saves its football and rugby clubs millions of pounds every year.

The England fly half moved to the south of France from Newcastle Falcons in May, seduced by a two-year contract that is said to be worth £750,000 annually.

However, Mourad Boudjellal, the Toulon president, faces a huge bill if the French senate on Thursday follows a tax law reform approved last week by the French National Assembly. In an interview yesterday with Sud Ouest, the French newspaper, the businessman complained that he was forced to reach into his own pocket in June for €100,000 to balance the club’s books. “It [the tax changes] will cost me between €500,000 and €600,000 for this season and at least €1 million next year,” he said.

French clubs were given a tax break in 2004 to help them to compete with the financial big guns of English football in the Premier League and the incentives introduced by Spain to attract foreign stars, the so-called Beckham tax. The droit à l’image collectif (DIC), allows clubs to treat up to 30 per cent of a player’s income as “image rights”, the player’s share of revenues from selling club strip and other lucrative spin-offs, rather than salary.

The DIC enabled French clubs to avoid some of France’s costly social security and employment taxes and French rugby clubs went on a hiring spree. In addition to Wilkinson’s move to Toulon, Stade Français signed James Haskell and Tom Palmer. In April, Racing Métro, the new Paris club with a reported transfer budget of €15 million, scored a nationalist coup by signing Sébastien Chabal, the hirsute star of Sale Sharks.

The loss of the tax break will raise the cost of hiring players for any French professional sports organisation. Gilbert Stellardo, the president of OGC Nice, believes that Thursday’s National Assembly vote could cost his club €1 million a year.

The tax-saving measure has caused a row to erupt within the French Government. Rama Yade, the secretary of state for sports, condemned the tax change as “dangerous” for the competitive status of French sport but her intervention was given a harsh put-down by Eric Worth, the budget minister, who said the money saved in taxes raised from professional sports should be redeployed into amateur sport.

“This is public money, money that belongs to the French people,” he said.

According to L’union des clubs professionnels de rugby, the tax change could be fatal for some club finances. Peter Hackleton, senior manager in the Sports Business Group at Deloitte, the accountancy firm, said that social costs can account for 50 per cent more on top of the salary bill for a French football or rugby club.