BUSINESS

The taxman catches up with Rafael Nadal

Tennis star moves business headquarters from Basque Country Companies were saving millions of euros thanks to special tax breaks

King Juan Carlos with tennis player Rafael Nadal.
King Juan Carlos with tennis player Rafael Nadal.SERGIO BARRENECHEA (EFE)

After a long and private match that lasted more than two years, Rafael Nadal has finally lost out to the tax authorities. The tennis player has been forced to move his company headquarters from the Basque Country to the Balearic Islands, and pay back millions of euros he was saving by doing business out of a region with a special tax rate of just one percent. The regular state corporate tax rate is 30 percent.

Between 2005 and 2011, the three corporations owned by the 10-time Grand Slam winner had estimated revenues of 56 million euros. For the last six years, these firms reported their headquarters as being in San Sebastián, even though Nadal is resident in his home town of Manacor, in the Balearics.

"This is a private issue. We are not going to reveal how much he paid," said a Nadal spokesman. Sources placed the amount in back taxes at several million euros.

The investigation into Nadal's business dealings was part of a wider five-year program against hundreds of companies that are suspected of having their headquarters in the Basque Country and Navarre for the sole purpose of benefiting from the ultra-low tax rates for so-called SPEs, special firms that invest in other companies. Nadal's businesses fit this profile, tax sources said.

"The law is very clear: the headquarters must be in the same place where the activity and the management take place," said a source. "Rafael Nadal [...] makes his money honestly, but he was only in San Sebastián to get his share of the pie. He took the wrong advice, because his companies should never have been here."

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