Real Madrid, Barcelona and five other La Liga clubs are being forced to pay back millions of euros given to them in state aid and/or favourable tax rates by local governments, due to a ruling by the European Commission.
The Commission had found that this cash had been paid to clubs in a variety of methods, including corporate tax privileges and re-valuation of land, and they have deemed that it gives the seven clubs in receipt of it an unfair advantage over other teams in breach of EU state aid rules.
Because of these findings, the Spainish government must now recover the illegal state aid payments from Champions League winners Madrid, La Liga champions Barca, Athletic Bilbao, Atletico Osasuna, Elche, Hercules and Valencia. According to Spanish media reports, these state aid credits date back 20 years and are estimated to total €68.8 million euros.
Explaining their decision, commissioner Margrethe Vestager – who is in charge of competition policy – said in her statement: “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.”
Madrid were found to be one of four clubs profiting from tax privileges, along with Barcelona, Bilbao and Osasuna. These four clubs were wrongly treated as non-profit organisations and were able to pay a 5 per cent lower tax rate on their tax profits for a 20-year period.
The Commission also examined a land transfer between the Santiago Bernabéu-based side and the City of Madrid and determined – based on an independent study – that the transaction for the land affected was overvalued by 18.4m euros. They ruled this also gave Real an unfair advantage over other clubs and that money now also needs to be paid back.
The amounts to be paid back are: Real Madrid 18.4m euros (£15.4m), Elche 3.7m (£3.1m) euros, Hercules 6.1m (£5.1m) euros and Valencia, 20.4m (£17.1m) euros. The Spanish tax autorities are yet to determine the value of fees to be paid by Athletic Bilbao, Barcelona and Osasuna at the time of writing.