European judiciary pursues Barcelona and Real Madrid clubs
A European court rejected an appeal submitted by Barcelona today regarding the issue of tax cuts, and ruled that the tax system that the Catalan club, along with its traditional rivals Real Madrid and two other Spanish clubs, have benefited from for 25 years constitutes illegal aid from the Spanish state.
In 2019, the European Union court initially annulled a decision by the European Commission in 2016 denouncing an undue tax concession and demanding a refund.
Today, however, the European Union Court of Justice, headquartered in Luxembourg, vetoed the Federal Court and ratified the relevant decision of the Commission.
"The court, in support of the findings of the appeal submitted by the committee, annulls the appealed ruling (issued by the Federal Court)," she said in a statement.
In particular, the Court of Justice cited a “legal error” of the General Court regarding the complex system of state aid and the limits that must be established.
It also considered that the committee was right to criticize Spain for not notifying the special tax system enjoyed by the four clubs: Barcelona, Real Madrid, Athletic Bilbao and Osasuna.
The court reminded that in 1990, Spanish law obligated professional sports clubs to convert to limited sports companies, adding, "But four clubs preferred to exclude them from the law, which allows them to continue working as non-profit legal persons, in order to benefit from a specific rate of taxes on their income."
Given that this rate set until 2016 was lower than that applied to public limited companies, the Commission decided in that year to reopen the Spanish file.
The Commission informed this member state of the European Union that the regulations allowing for this tax advantage constitute an "illegal and inconsistent aid scheme" with European rules, and has ordered it to recover money from the beneficiary clubs.
Following this, Barcelona took the case to European Union justice.
In 2019, the head of the Spanish Supreme Council of Sport, Miguel Cardinale, estimated the financial impact of the Brussels decision on the four teams at 1.6 million euros, for the past four fiscal years only, and described it as "ridiculous amounts for the football economy."
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