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Image Rights: Cristiano Ronaldo facing €15 million tax fraud case in Spain

By Prof Dr Ian Blackshaw Tax fraud proceedings have been initiated, on 13 June, 2017, against super football star, Cristiano Ronaldo, in a Madrid Court by the Spanish Prosecutor, acting on a report by the Spanish Tax Office. Ronaldo is accused of allegedly defrauding the Spanish Tax Authorities of €14.7 million, between 2011 and 2014, by knowingly using a business structure to hide his image rights income in Spain. Prima facie, the use of image rights companies by sports and other personalities to reduce their tax liability is not uncommon and, according to the principle that tax evasion is a crime, whereas tax avoidance is not, is perfectly legal. However, the structures/arrangements used need to be legally sound and defendable. Thus, the image rights companies, including the related image rights management companies, must have substance and real activity; also the value of the image rights must be properly valued and commercially justified; and the interrelated contracts must be properly drawn up. It is reported that Ronaldo, when he joined Real Madrid in December 2008, assigned his image rights to a company, in which he was the only shareholder, which was domiciled in the British Virgin Islands (a tax haven). This company then assigned the rights to another company, domiciled in the Republic of Ireland (also a tax haven), with the purpose of managing these rights. It is alleged by the Spanish Prosecutor that the Irish Company did not have any business activity. The Spanish tax authorities claim that, because Ronaldo became a tax resident in Spain in January 2010 and in November 2011 opted to follow the Spanish tax regime applicable to foreigners, he should have paid Spanish tax on his very valuable image rights’ earnings at the rate of 24% in 2011 and at the rate of 24.75% in each of the three following years. It will interesting to see how the case unfolds and whether the image rights structure that Ronaldo set up and operates passes muster under Spanish Tax Law. The Ronaldo Spanish tax fraud case follows the Messi case, in which the Spanish Supreme Court on 24 May 2017 upheld a Catalan Regional Court’s imposition of a 21 month prison sentence on him for defrauding the Spanish Tax Authorities of €4.1 million in respect of the commercial exploitation of his image rights. Also, Neymar is facing a corruption trial in Spain in connection with the value of his transfer fee in 2013 from Santos to Barcelona. It seems that the Spanish Tax Authorities are out for their pound of flesh from mega-rich foreign football stars playing in Spain! Prof Dr Ian Blackshaw may be contacted by e-mail at ‘This email address is being protected from spambots. You need JavaScript enabled to view it.

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