Academic journal article The International Sports Law Journal

Spanish Football Clubs' Tax Debt Awakes Storm

Academic journal article The International Sports Law Journal

Spanish Football Clubs' Tax Debt Awakes Storm

Article excerpt

Spanish Secretary of State for Sport Miguel Cardenal sparked outrage in Europe when he suggested waiving the unpaid tax bills of the Spanish football clubs. The clubs in Spain's top two divisions collectively owe some 750 million euro to the tax authorities and another 600 million euro to the social security system. Among the clubs with the highest tax debt is Atletico Madrid (155 million euro), which bought top striker Falcao for a club record deal of 40 million in August 2011. At a time when Spain's debt problems continue to escalate, more than five million Spaniards are unemployed and suffering from the cutbacks, it would be unacceptable if football clubs were treated more favorably than normal taxpayers. Moreover, giving tax amnesty would constitute State aid, capable of significantly distorting competition, and go against UEFA's Financial Fair Play rules.

Faced with public outcry, Cardenal wisely dropped the consideration of forgiving the tax debt. The Spanish government started up discussions with the Spanish football league (LFP) to cut a deal. On April 25, 2012 both parties announced a plan for clubs to repay their tax debts. The most important measure is that, beginning in the 2014-2015 season, clubs will be obliged to set aside 35 percent of their revenues from the sale of audiovisual rights as a guarantee against tax obligations. The government will exercise administrative control over the LFP. It was stressed that economic control and sanctions will be strict. If clubs transgress the new rules, they can be barred from competition. …

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