The European Commission has told seven Spanish professional football teams that they must pay back millions of euros in illegal state aid that gave them “an unfair advantage over other clubs”.
The ruling, announced in a press release on Monday, follows a two-and-a-half-year investigation into tax breaks, inflated land-transfer agreements and overly favourable loans.
The sides considered to have benefited from such ‘incompatible aid’ are Real Madrid, Barcelona, Valencia, Athletic Club, Osasuna, Hércules and Elche.
Margrethe Vestager, the commissioner responsible for competition policy, explained:
“Using tax payers’ money to finance professional football clubs can create unfair competition.
“Professional football is a commercial activity with significant money involved and public money must comply with fair competition rules. The subsidies we investigated in these cases did not.”
The Commission has deemed that Real, Barça, Athletic and Osasuna all received unfair tax advantages “without an objective justification” after being exempted from registering as limited liability companies in the early 1990s.
By being treated as non-profit organisations, they enjoyed a tax rate 5% lower than that applied to LLCs. The EC has therefore ordered that they each return a figure of up to 5 million euros in unpaid taxes, with the exact amount to be decided by the Spanish authorities.
In addition, the body has also ruled that Real benefited from a land-transfer deal with Madrid City Council in which the area involved was overvalued by €18.4 million. This gave Real “an unjustified advantage over other clubs, which it now needs to pay back,” said the Commission’s statement.
Finally, the EC has judged that the state-owned Valencia Institute of Finance (IVF) granted Valencia, Hércules and Elche loans on excessively ‘favourable terms’.
It has been determined that they must repay 20.4 million, 6.1 million and 3.7 million euros, respectively.