Spanish clubs win EU tax ruling on ‘state aid’ case

Scales of justice

February 26 – A European court has delivered a legal victory for Barcelona, Real Madrid and two other top Spanish clubs annulling a 2016 EU state aid ruling that had penalised them over tax breaks.

Three years ago the Commission ruled they had benefited unfairly from a lower corporate tax rate in violation EU state aid rules.  Its competition enforcer argued at the time that Barcelona, Real Madrid, Athletic Bilbao and Osasuna enjoyed a 25% tax rate for more than 20 years, compared to the 30% norm for sports companies. It said the clubs each had to pay back up to €5 million ($5.7 million).

The lower tax rate came about because the four were treated as non-profit organisations instead of professional football clubs with limited liability.

But the General Court of the European Union, the EU’s second highest tribunal, said the Commission had “erred in its assessment of the facts” when it ruled that the tax arrangements amounted to illegal state aid to the clubs.

The Luxembourg-based court said that the commission had “not shown to the requisite legal standard that the measure at issue conferred an advantage on its beneficiaries” and threw out the 2016 decision

The ruling means the clubs do not have to repay millions of euros to the Spanish authorities, as they had been ordered to do in the 2016 decision, a setback for regulators seeking to tackle tax avoidance.

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