Real Madrid ordered to repay more than $22M due to unfair tax, profit

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Real Madrid ordered to repay more than $22M due to unfair tax, profit

Real Madrid is the richest football club in the world, estimated to be worth well over $3 billion. But it’s been paying a lowered rate of tax in Spain and profited from unfair compensation as part of a land transfer deal with the city council of Madrid.

CCTV America’s Jack Parrock has the story. Follow Jack Parrock on Twitter @jackeparrock

Real Madrid ordered to repay more than $22M due to unfair tax, profit

Real Madrid ordered to repay more than $22M due to unfair tax, profit

Real Madrid is the richest football club in the world, estimated to be worth well over $3 billion. But it’s been paying a lowered rate of tax in Spain and profited from unfair compensation as part of a land transfer deal with the city council of Madrid. CCTV America’s Jack Parrock has the story.

The European Commission has deemed the lower tax rate unfair and ordered Real Madrid to repay more than $22 million.

“There’s big money in professional football — of the transfer prices everyone looks at and says ‘oh they’re very high,'” Margaret Vestager, European commissioner for compensation said. “It’s the rights to show the matches, etc. But I think if you’re a fan and your team is losing, well that may be if it’s because they weren’t the best team, but if you then know that you as a taxpayer have supported the other team, I think that would make you feel bad.”

Real Madrid was among seven Spanish football clubs the EU forced to repay money to local authorities, including Real Madrid rivals Barcelona and Valencia.

As part of the same ruling, the commission cleared five Dutch teams of similar accusations.

European lawyers said this case is simply an application of EU law.

“Without state aid control you have total disintegration of the market because we are not as integrated as the Chinese or the Brazilians or the Americans,” Jacques Derenne, head of EU competition practice at Sheppard Mullin said. “So there is a need to maintain cohesion in Europe to control the unfair measures granted by states against each other.”

Although the money the football clubs are being ordered to repay constitutes only a small percentage of their turnover, Brussels wants to send out a signal it’s clamping down on big corporations benefiting from state aid support in the EU.


Mike Bako on professional sports leagues and financing

For more on professional sports leagues and financing, CCTV America’s Michelle Makori spoke to Mike Bako, sports editor for the DailyNational.