Spanish soccer has come to the attention of the tax man. Half-a-dozen lawyers consulted by EL PAÍS have confirmed a rise in tax inspections against soccer players suspected of abusive fiscal practices.
Stars such as Sergio Ramos, Iker Casillas and Xabi Alonso have already been the target of inspections, the newspaper El Mundo reported. But there are other top players under scrutiny, including Mascherano, Iniesta and Piqué.
“Right now, four top players at Barça are being investigated,” says a partner at a renowned law firm.
“And there are more cases in Real Madrid that haven’t emerged yet,” adds another expert who knows of several “international players with Spanish residency” who have received a tax agency letter.
Legal experts warn that the tax agency has changed its interpretation of two operations that players often utilize to lower their tax payments.
One is related to the companies that manage the athletes’ image rights. The other involves a fee that some clubs pay players’ agents for a transfer or contract renewal.
Many of these investigations end with a settlement between the agency and the player, who pays an “intermediate” fee.
“A war is being waged between the Tax Agency and Spanish soccer, and it got worse following the confrontation between Javier Tebas, president of the Professional Football League, and Soledad García, the Tax Agency’s collection director [Tebas accused her of wanting to liquidate Spain’s soccer clubs],” explained a high-ranking treasury officer, who wished to remain anonymous.
“In recent months, there has been a radicalization of controls over elite and non-elite players,” confirms another lawyer who works with soccer players.
The genesis for this situation is a change to a 1996 law that used to allow high-earning athletes to receive 85 percent of their salary directly from clubs, and 15 percent indirectly through an image-rights management company. The largest chunk of their pay was taxed at around 52 percent, while the other portion was taxed at 30 percent. For a player making €5 million, the savings represented around €400,000.
Over the next three years all soccer players are going to be targeted over the issue of image-rights companies or agent fees”
This special regime was changed in 2006, but until recently tax authorities had turned a blind eye on the world of soccer. But now, inspectors are reviewing the last four years’ worth of many players’ tax returns.
Another lawyer for a big Madrid law firm adds that the new trend is just starting to gather speed.
“Over the next three years all soccer players are going to be targeted over the issue of image-rights companies or agent fees,” he says.
One legal adviser admitted that in some cases the Tax Agency might be right, and that some players registered their homes and cars to their company’s name in order to lower their taxes, even though the companies had no business activity.
Tax authorities are also examining the 10-percent fee that agents get every time a player is signed to a new team or gets renewed. While the player should be paying this out of his net salary, occasionally the club agrees to do so instead. A player with a five-season contract for €5 million would save himself around €2.5 million.
Ransés Pérez-Boga, president of Spain’s tax inspectors, underscored that these cases are different from the high-profile cases of Leo Messi or Neymar, who had complex corporate structures set up in foreign countries.