Former Real Madrid player Raúl González Blanco has partially won his court battle with the Tax Agency over his image rights. The National Court has reduced the settlement and penalty imposed for declaring that income through a company, as has happened to many other professional colleagues. The Litigation Chamber admits the prescription of the execution inspected of said company corresponding to the 2009 financial year and reduces that of 2010. This ruling can be appealed before the Supreme Court.
The period analyzed by the Treasury corresponds to the last season in which the former captain of the Spanish team played for Real Madrid before leaving for the German team Schalke 04. The summer of 2010 was the summer of that signing. It must be remembered that the white striker was one of the highest paid in the Spanish team’s squad. As the entire practice of elite players did, he created a company to manage their image rights, a structure that often seeks to reduce the tax bill. The income includes those generated by the ten-year agreement with Adidas signed in 2000 (just over one million euros per campaign).
The case begins in March 2019. The Treasury confirmed a settlement agreement corresponding to personal income tax and another sanction derived from the previous one initially signed in 2015. In the 30-page ruling of the National Court, consulted by La Información, the complete amount is not specified. and the accounts of the company involved are not reflected either. Regularization is based on two concepts. One is the taxation of income derived from the transfer of his image rights to the Europa Scar Sport entity (successor of the Rolo Imagen company), of which he was administrator. The AEAT claimed that there was a “continuous confusion of assets and personalities and a disorderly and negligent use of rights for reasons of opportunity and, of course, for tax reasons.”
The other is the integration into the former footballer’s tax base as income from work of the money paid by Real Madrid and Schalke 04 to his agent, through the company Nescar Sports. Before starting the administrative litigation phase, the TEAC partially upheld González Blanco’s demands by considering that the remuneration paid by the German team through that company should not be included in personal income tax based on the Spain-Germany double taxation agreement.
An old inspection
The first fight of the battle is won by the player. He claimed the prescription of the inspection carried out for 2009, understanding that the actions of the Tax Agency had exceeded the mandatory period of twelve months. The actions began in January 2014 and must have concluded on January 30, 2015. They did not end until April. The administration asked to eliminate almost 4 months of dilations not attributable to them – and therefore to the player. The Court will not agree to compute two periods of unjustified interruption. Therefore, it did not have the capacity to regularize the 2009 financial year, whose deadline ended on June 30, 2014.
With the 2009 inspection overturned, the Court analyzes the case linked to the 2010 financial year. The inspection concluded that after the signing of the image contract by Raúl with Adidas from July 2000 to June 2010 for a price of 200 million pesetas(1 , 2 million euros) at the time of signing and 165 million pesetas (991,000 euros) the rest of the years, the money had to be integrated into the footballer’s tax base since it was he who formed the agreement by transferring his image. The same qualification was given to the money – not specified in the sentence – paid to the personal company Europa Scar Sport.
The Contentious Chamber supports the Treasury’s criteria on the inclusion of the income from the Adidas contract in the footballer’s personal income tax base, because the contract for the transfer of rights could not be accredited – there was a “verbal” agreement ””-. In addition, he also shares the conclusions of the inspection regarding the “confusion” that exists when sometimes the footballer transfers the rights – not only those of Adidas but also those of the Everest publishing house – to the personal company and other times it was the athlete himself. According to the Court, it is incongruous that he was the one who transferred the rights to Schalke 04 in July 2010, when on that date the rights supposedly belonged to Europa Scar Sport, which in turn had transferred 50% of them to Real Madrid.
Two ‘reductions’
One of the points in which he wins the game is the attribution to Raúl himself as income from work of the payments made by the Spanish and German clubs to Nescar Sports, the company owned by his agent, Ginés Carvajal. The inspection showed that today Raúl was Carvajal’s client, “he must be the one to pay his compensation, understanding that the payments made by the clubs to Nescar are payments made in the name” of Raúl. Applying the doctrine established by the Supreme Court last year, they insist that the Tax Agency “exceeded itself.” “In any case, he should have used other planned figures for this purpose and by not having done so, he has used an inappropriate means to carry out the regularization carried out, he concludes.”
There is another point that would also allow the player to reduce the sanction, in addition to his agent’s income. One of them is the “incorrect classification” of the infraction as serious. The Court insists that there is an “inadequate appreciation” of the circumstance of aggravation of the sanction for concealment. Both this concession and the one that has to do with the payment to Carvajal are not quantified in the sentence. That is to say, it is not possible to know how much savings this represents for the player, nor is the amount that he will stop paying due to the expiration of the 2009 financial year reflected.
Finally, two other points are raised by the player’s legal team that are not accepted by the magistrates. One has to do with determining the basis for the sanction. They support that the base be the amount not entered in the self-assessment as a consequence of the commission of the infraction. They do the same with the setting of the tax amount to be paid and with the presumption of guilt. This ruling is recurrent before the Supreme Court and, predictably, will be where it will end with an appeal by the Tax Agency.
