In the crossover of resources and notifications that occurs between the Treasury and the clubs on the way in which the footballers’ agents are paid, there are two sentences that frequently appear as a weighty recurring argument of the Tax agency why sit jurisprudence on the matter. Two cases after which two very relevant names in the world of football emerge, those of Jose Mourinho and Gerard Piqué.
The resolutions on two judicial processes have served the National Court to validate million-dollar sanctions against important First Division clubs, such as Real Madrid, Atlético de Madrid, FC Barcelona, Villarreal, Sevilla and Valencia for obtaining benefits when paying taxes as the club itself was the one that paid the footballers’ agents and not the player himself.
Case of Piqué, FC Barcelona and IMG
The first, the one that refers to the Barcelona center-back, “refers to the sentence of June 12 and 13, 2019, in relation to the liquidations of the Barcelona Football Club and one of its players for the Personal Income Tax , period July 2018 and fiscal years 2008-09-2010, also respectively”.
The judgment considered “the documentation provided to the file and in the jurisdictional the concurrency of absolute simulation, while the services that are said to be provided by INTERNATIONAL MANAGEMENT GROUP (IMG) to Fútbol Club Barcelona, would actually be services provided by the player avoiding making the corresponding withholding and depositing the amount in the Treasury in order to pay amounts greater than those declared, firstly, to see their personal income tax reduced, and secondly, so as not to pass on the fee that is not could be deducted.”
A term is used in it, “absolute simulation”, which reappears in other cases in which Barcelona participates, such as in the judgment of the National Court 1036, where it speaks of a “contract that the Tax Inspectorate considered simulated by concealing a payment that would actually correspond to the player of the aforementioned Club, in favor of his representative, the aforementioned entity IMG”.
For a later paragraph raise the tone by stating that “FC Barcelona was fully aware of the illegality of its conduct. How could FC Barcelona not know that IMG did not provide any type of service to the Club? whatAnd how was FC Barcelona not going to know that VAT payments were being deducted from services that were clearly non-existent?.
It is mode of operationin which the participation of the soccer player is raffled to establish the payment directly between the club and the agent, is the common denominator of many of the judgments of the National Court referring to irregularities in the taxation of soccer players.
Thus, in judgment 3131 of the contentious-administrative chamber, also referring to a contract in which the Barcelona Football Club, Gerard Piqué and their representation agency, IMG, participate, it is stated that “the settlement agreement maintains that the indicated contracts are simulated, since, in reality, they conceal the payment of the commissions that GPB (Gerard Piqué Bernabéu) had to make to IMG, branch in Spain, in its capacity as agent of the player. Hence, in application of article 16 of the LGT, the Tax Inspectorate and the TEAC conclude that the amounts paid by FC Barcelona to the aforementioned company, plus the VAT passed on by the latter, have the status of work income. of GPB and, therefore, they must be included in the general tax base of the personal income tax of the player for the years 2008, 2009 and 2010, without the right to deduct the amount of the withholdings that FC Barcelona should have practiced in the years 2009 and 2010” .
In the case of Piqué, the player’s resource was finally partially estimated and the ruling was annulled “since the right of the Administration to determine the tax debt had been prescribed and, likewise, the disciplinary agreement corresponding to the years 2010 to 2012”.
Case Mourinho, Real Madrid and Gestifute (Jorge Mendes)
The other sentence of the National Court that has created jurisprudence refers to the signing in 2010 of Jose Mourinho by Real Madrid from Inter, with the participation of Gestifute, a company owned by Jorge Mendes, the coach’s agent. The same, from December 23, 2021, warns with a particularly didactic tone that “it is convenient to reflect on the operation followed by the Club that, instead of directly satisfying the commissions to the footballers, makes payments in their name and on their behalf to the different agents. In principle, the Club has paid the same amount as commission as if it had been paid to the player as a higher compensation. In addition, it has supported a VAT quota that did not correspond to it, but that has no economic significance, since it could be deducted in its self-assessment for said tax.
“The players, for their part,” the ruling continues, “have benefited fiscally.” First, because “if their agents had billed them, they would have had to bear a VAT quota without the possibility of deducting it, since they are considered final consumers and are not VAT taxpayers”. And, second, because if the club “had included the amount of the commissions in their remuneration, by obtaining a higher remuneration, they would have increased their tax base and consequent taxation in personal income tax. In addition, they should have paid the commission to their representatives without the possibility of deducting it from personal income tax when paying taxes on earned income.”
The Central Economic-Administrative Court (TEAC) finally considered that the commissions received by the representatives were for intermediating between the clubs and the players and that they acted as agents for the players, even though the clubs assumed the payment on behalf of the footballers. And he understood that the The payments made by the Club to the agents clearly represented a benefit for the footballers, by avoiding them having to remunerate their agents in these operations. “In conclusion, it is logical to impute income to the footballers for the payments made to the agents, since ultimately, the services provided referred to elements that obviously affected and benefited the athletes”, says the ruling in reference to the TEAC resolution.
