European Union Court Dismisses Tax Allegations Against Athletic Club, Osasuna, Barcelona, and Real Madrid
In 2016 a serious allegation was lodged against Athletic Club, Osasuna, Barcelona, and Real Madrid. The European Commission claimed that the four clubs had benefitted from tax aid over the years due to their “non-profit legal entity” status and the Commission demanded that Spain change their status and that the clubs repay the taxes that they were said to owe. All four clubs appealed.
To understand the situation it’s important to know where this all started. Back in 1990 Spanish Law forced professional sports clubs to become “sports public limited companies” with the goal being to create transparency in the way they were managed. However, there was an exception. Clubs who had a positive economic standing from previous years were allowed to choose whether to follow this new law or remain as sports clubs.
Athletic Club, Osasuna, Barcelona, and Real Madrid all chose to continue operating in the same way which is how this issue began. By classifying as a sports club the four operated under a lower tax rate on income than other clubs until 2016. These four enjoyed a tax rate of 25% as opposed to 30% for others. Their appeal has been ongoing for a while now and a ruling has finally been made.
On Tuesday the European Union General Court, based in Luxembourg, has ruled in favor of the four clubs citing a lack of proof in the Commission’s allegations. “The Commission has not shown to the requisite legal standard that the measure at issue conferred an advantage on its beneficiaries”, stated the court.
The court has ruled that the Commission made several errors in their case against the four clubs. One of the biggest issues with their allegations is that they used “aggregate data” covering the last 4 years instead of the entire many years that have passed since the 1990 law was put in place. “The Court concludes that the Commission made an error in the assessment of the facts”, they affirmed.
The European Commission will now have 2 months to appeal this ruling, which means that the case might not be over yet. That being said, this rare defeat for the Commission may lead them to move on to other matters around the continent. For now, the court ruling is a very good thing for Athletic and will also see over €3 million returned to the club by the Regional Treasury of Bizkaia.