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Spain: Former FC Barcelona player Luis Enrique to face criminal penalties on tax fraud allegations

Prosecutors in the proceedings initiated against former Real Madrid and FC Barcelona player Luis Enrique Mart?nez have claimed that the player shall receive a three-month prison sentence, to be substituted by a ?68,000.00 fine due to the fact that this is the player's first criminal infringement and that the prison serving sentence should in any case be for a period not exceeding one year. The prosecutors also claim that the player shall pay an additional fine of ?50,000.00. The facts being judged are as follows: in 1997 Luis Enrique Mart?nez entered into a contract with Nike BV, a company resident in the Netherlands, whereby Nike BV would pay a sponsorship fee to the player in consideration for the player's use of Nike's football shoes. In 1998, in connection with the player's extension of his contract with FC Barcelona, the club managed to obtain from Nike BV (at that time one of the club's sponsors) an increase in the sponsorship fee payable by the latter to the player. In that connection, Nike BV made an additional payment of ?600,000.00 to Foot Force Sport, a company resident in the Netherlands Antilles and wholly controlled by Luis Enrique Martinez. The payment was made to the Antillean company's bank account in Switzerland. In connection with the audit of the player's Individuals' Income Tax return for 1998, the Revenue Service took the view that the payment of ?600,000.00 should be attributed to the player himself rather than the Antillean company. The player, on his part, initially claimed that such payment should have been classified as remuneration of his personal services made by Nike BV on behalf of FC Barcelona. He thus claimed that such payment should have been subject to withholding tax, which would have shifted the tax liability to the club itself. In the context of a plea bargain he later dropped that view, accepted the facts and the classification of income made by the Revenue Service and paid the tax due.
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The editors of  the Journal Sports Law & Taxation are Professor Ian Blackshaw and Dr Rijkele Betten, with specialist contributions from the world's leading practitioners and academics in the sports law and taxation fields.

The Editors

Managing editor
Dr. Rijkele Betten

Consulting editor
Prof. Dr. Ian S. Blackshaw

Editorial board

Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam

 

Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano

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