19th Oct 2019

Commission opens tax probe on Spanish football clubs

The European Commission has launched a series of investigations into whether Spain's football clubs have benefited from unfair tax breaks worth billions of euros.

EU competition chief Joaquin Almunia Wednesday (18 December) confirmed that probes had started into whether seven clubs, including Real Madrid and Barcelona, two of Europe's most successful and wealthiest clubs, had broken EU rules on state aid.

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  • Almunia denied having a conflict of interest despite supporting Atletico Bilbao, one of the clubs under investigation (Photo: European Parliament)

"Football clubs should finance their running costs and investments with sound financial management rather than at the expense of the taxpayer," he said.

The EU executive will focus its main investigations on possible tax privileges for Real Madrid, Barcelona, Atletico Bilbao and Osasuna.

The four clubs are currently exempted from national rules requiring professional clubs to be limited companies because of their status as member-owned clubs. The exemption allows the clubs to pay a corporate tax rate that is 5 percent lower than other teams.

According to the complainant who raised the issue with the Commission, the clubs have benefited to the tune of several billion euros.

Real Madrid, for its part, is also under investigation over a property swap with local authorities in 2011. A commission document commented that the club "appears to have benefited form a very advantageous real property swap with the City of Madrid."

Meanwhile, three other clubs - Valencia, Hercules and Elche - face a probe into whether they received state guarantees from the Valencia Institute of Finance for bank loans totalling over €100 million.

Despite being ranked first and third in the Forbes' list of the world's richest clubs earlier this year, Real Madrid and Barcelona have debts totalling €540 million and €440 million respectively, although both continue to spend heavily in the transfer market.

The 20 clubs in La Liga, the country's top division, have debts estimated at €3.5 billion. Spanish clubs also owe an estimated €750 million in unpaid taxes.

Taking on Spain's two largest football clubs is unlikely to improve the popularity of Almunia, a self-confessed Atletico Bilbao supporter, in his home country.

However, that did not stop the European Ombudsman, Emily O'Reilly, accusing Almunia of dragging his feet on the matter. Almunia was a government minister in Spain when the tax exemptions were agreed.

"The commission has failed to act on this complaint for more than four years. Not only is this bad administration, but to the European public it can look like a conflict of interest given the commissioner's strong links to one of the football clubs in question," said O'Reilly in a statement on Tuesday.

"One day the Spanish foreign minister says that Almunia is attacking Spanish football and next the European Ombudsman says that Almunia is dragging his feet," remarked the commissioner in response.

"Today it is an investigation into Spanish football…but in the future it could be clubs from another EU country."

In March the EU executive opened an inquiry into whether five Dutch football clubs had received illegal taxpayer-funded subsidies.

"We opened six different investigation and we are on our way," commented Almunia on the Dutch cases.

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