Ancelotti, Madrid coach, joins the list of figures who have had fiscal problems

2024-03-08 06:48:01

BARCELONA (AP) — Real Madrid coach Carlo Ancelotti has become the latest soccer figure to get into trouble with Spanish authorities for allegedly failing to pay his taxes.

Although the Italian coach may still win his case in court and reach an agreement to avoid a trial, Spain does not usually entertain superstars such as Lionel Messi, Cristiano Ronaldo, José Mourinho or even Colombian pop star Shakira over the last decade. .

All have been accused of attempts to hide at least some of their earnings.

The large group of celebrities summoned before judges for tax cases has coincided with Spain’s slow recovery after a painful economic slowdown, as a result of the global recession that occurred from 2008 to 2013.

Spain avoided a humiliating bailout that Portugal and Greece had to accept. However, it did have to cut its spending on public education and health services.

This generated widespread discontent that included protests and eventually gave rise to an anti-austerity political movement that is still relevant today.

Pere Soldevila, a lawyer and professor at EAE Business School in Barcelona, ​​said Spain has since gone after these stars, in order to send the message that even the privileged have to pay.

“Politically, the two (main political) parties have sold the idea to you, who earn less because of the cuts, that to those who earn more, let’s go after them,” Soldevila said. “The citizen who didn’t make it to the end of the month likes them to pay.”

And even though the Spanish economy is now strengthening, the search for improper acts by celebrities continues. The policy implemented by the Spanish Tax Agency in 2012, publishing an annual list of people who owed the most in back taxes, has continued as a maneuver that would publicly shame those people.

Ancelotti’s case, like those of Messi, Cristiano and Mourinho among others, is not related to the salaries he earned with his club, but to the businesses carried out for image rights, consisting, for example, of giving a photo to a company for a advertising campaign.

Many professional players and coaches have established a company that owns the rights to use their name and image for commercial purposes. But Spain’s tax authorities have targeted footballers who use front companies in tax havens.

Rafael Fernández Montalvo, partner at the Cremades & Calvo-Sotelo law firm, explained that the great difference between taxes for those who earn enormous amounts and for companies in Spain creates the temptation among some footballers to use these ghost companies.

“The existence of a personal income tax with a high degree of progressivity (in Spain the marginal rate can reach 51.4%), compared to a corporate income tax, subject to fixed rate (currently 25%) is the main reason that, traditionally, has explained that, especially self-employed professionals, resort to the constitution of companies under whose protection they try to avoid the progressivity of personal income tax,” he commented.

IRPF is the Personal Income Tax.

Prosecutors accuse Ancelotti of using, for example, companies “without real activity” in the Virgin Islands as part of an alleged scheme to defraud €1 million obtained in image rights in 2014 and 15. Prosecutors brought two counts of tax fraud on Wednesday, and are seeking a prison sentence of four years and nine months.

Ancelotti assured that he is innocent, arguing that he was not a tax resident in Spain during the time of the operation to which the lawsuit points. Prosecutors disagree.

“I have paid the fine… I am convinced that I am innocent and that I was not a resident in 2015, they think that I was, let’s see what the judge decides,” Ancelotti said.

Martin Jacob, professor of accounting and control at IESE Business School in Barcelona, ​​said Ancelotti apparently got his financial planning wrong.

“Ancelotti cannot tell us that his image rights were created there (in the Virgin Islands). “It’s an unlikely story,” Jacob told the AP. “I mean, look at LeBron James, it would be hard to argue that his image rights were created in the Cayman Islands.”

“I have the feeling that celebrities in Spain thought 10 or 15 years ago that this would work, and maybe it worked then, but now it’s clear that it wouldn’t.”

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The list of footballers who have faced accusations of tax evasion in Spain includes the Croatian Luka Modric, the Argentines Javier Mascherano and Ángel di María, the Brazilian Marcelo, the Chilean Alexis Sánchez, the Portuguese Ricardo Carvalho and the Colombian Radamel Falcao.

The only player exonerated of tax fraud was Xabi Alonso.

Popular actors and singers in Spain have also been persecuted. The biggest star of all, whose fame rivals or even surpasses that of Messi or Cristiano, has been Shakira, who lived in Barcelona.

The Colombian singer accepted a settlement that included acknowledging that she did not pay enough taxes.

None of these celebrities have gone to prison. All have paid fines so that their sentences are limited to less than two years, which allows the judge to suspend the sentence because they are people who have committed a crime for the first time. But fines hurt, and they leave stains on legal records and reputations.

At around the same time that Spain was tightening surveillance, France was trying to respond to popular discontent sparked by the global recession by implementing a 75% tax on the super-rich, including the highest-paid soccer players. French clubs protested, warning that this would scare away talent, and the measure was eventually aborted.

Otherwise, there have been few cases of prominent athletes getting into tax trouble in other European nations.

French authorities have launched an investigation into allegations that Paris Saint-Germain received favorable tax treatment in 2017, when Neymar joined for a record €222 million. Anti-corruption agents raided the finance ministry in January, suspecting some politicians helped PSG get special treatment to avoid paying millions.

Boris Becker, the German tennis great, received a two-year suspended sentence for tax evasion and attempted tax evasion in 2002. He tried to show that he lived in Monte Carlo, when in fact he lived in Munich.

More recently, Becker was jailed in Britain for hiding assets after he was declared bankrupt. Steffi Graf’s father was also behind bars for tax evasion.

In another case involving German sports, Bayern Munich president Uli Hoeness resigned before serving a sentence for evading the payment of some 28.5 million euros ($31 million) through an undeclared bank account. Swiss. He was re-elected to his position after his release.

The most notorious case in Italy occurred a couple of decades ago, when police seized two Rolex watches from Diego Maradona at a press conference outside Naples. Three years after 2006, a pair of luxury rings was also seized in Bolzano.

Jacob, the accounting expert, said he wouldn’t be surprised if there was what he called a “network effect,” consisting of bad advice or bad friendships, spread among Spain’s soccer elite.

“I’m pretty sure there’s a lot of word of mouth. And establishing an image company in the Bahamas is something quite peculiar. “It is not something you go to buy at the supermarket,” he indicated. “CEOs of companies talk to each other, share knowledge. And I’m pretty sure footballers share the same thing.”

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Sam Petrequin in Brussels, Andrew Dampf in Rome and James Ellingworth in Düsseldorf, Germany, contributed to this report.

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