Search

Editors

Richard L. Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Harry Cassin Managing Editor


Elizabeth K. Spahn Editor Emeritus

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

« Police arrest former Malaysia PM Najib after seizing truckloads of loot | Main | Beam Suntory pays $8 million to resolve FCPA offenses »
Tuesday
Jul032018

The best defense against Ronaldo, Messi, et al? Bring a tax case

The last few years have revealed a growing trend of prosecuting top-grossing soccer superstars for tax evasion and tax fraud.

Ordinarily nobody would think twice about the nature of these prosecutions. However, the timing of the allegations conveniently align with major spotlight games.

When major European professional soccer clubs compete, such as Barcelona, Real Madrid, and Paris Saint-Germain, their matches generate up to up to $716 million in revenue per match, exclusive of commercial and broadcasting rights. Taking legal action against top soccer players before high-grossing games jeopardizes the revenue of these organizations and their players. That's when prosecutors can wield bargaining power over players and confederations.

Have prosecutors effectively cornered these federations by targeting their top grossing players before game days? Cristiano Ronaldo, Lionel Messi, and Neymar -- the top grossing soccer stars -- have all been charged in the latest wave of tax-related crack-downs. Is this merely a coincidence?

Spain’s Beckham Law, which enabled wealthy foreign workers -- such as professional soccer players -- to apply for a tax exemption, was no longer given effect after 2010. The law used to allow part-time residents of Spain to pay reduced tax rates based on domestic Spanish income alone, rather than all revenue earned internationally.

As of January 2015, a new Spanish decree exempted soccer players from taking advantage of this loophole. Consequently, this modification resulted in more robust prosecution of athletes by Spanish authorities, as athletes attempted to circumvent existing tax laws by diverting funds to offshore shell companies. We have the Panama Papers to thank, in part, for revealing information about these activities.

The 2018 World Cup has begun. This has already proven to be a prime opportunity for countries like Spain to ramp up their prosecution of soccer players for tax-related crimes. Less than a day before Portugal-Spain match, Spanish authorities announced Ronaldo’s guilty plea for tax evasion. The superstar agreed to a two-year suspended sentence and a $21.8 million penalty.

(Spain’s suspended-sentence program typically allows first-time offenders with sentences under two years to avoid serving jail time -- usually, after paying a hefty fine.)

With little time and a lot of money to spare, the soccer confederations and players themselves will face substantial pressure in games to come. The 2022 World Cup in Qatar and preceding qualifying rounds are quickly approaching. We will likely continue to see a growing trend of soccer players prosecutions and large settlement agreements before spotlight games.

____

Carina Tenaglia is a rising 3L at The George Washington University Law School.  She can be contacted here.

Reader Comments (1)

What is your recommendation Casandra? The title is not further worked on in the article? Interested in hearing your thoughts for actions in more detail.
July 3, 2018 | Unregistered CommenterDaike Van de Putte
Comments for this entry have been disabled. Additional comments may not be added to this entry at this time.