Mourinho spared prison in tax fraud settlement
Jose Mourinho is the latest football star to fall foul of Spanish tax laws as the country’s authorities continue their crackdown on tax evasion.
The former Manchester United manger has been ordered to pay a fine of over €2 million and given a one year prison sentence for tax fraud.
However, Mourinho will be spared any jail time by paying an additional fine of €182,000 due to Spain’s unwritten law that first time offenders won’t be prosecuted.
The accusations stem from Mourinho allegedly owing €3.3 million in tax to Spanish authorities during his time as Real Madrid manger in 2011-12.
Mourinho was alleged to be hiding the full extent of his earnings by using several shell companies registered to the British Virgin Islands.
The manager is the latest in a long line of footballing personalities who Spanish authorities have punished under new incentives to reduce tax evasion.
Why has Spanish football got a tax problem?
Spanish football’s tax problems stem from Real Madrid’s Galacticos whose big money signings lead to the creation of the Beckham law in 2005.
The law was introduced as a tax exemption scheme set up to encourage more foreign imports into the country by capping the tax paid on foreign players wages at 24%.
This was almost half of the 43% cap imposed on Spanish nationals earning the same amount.
In 2010 the Beckham law was scrapped for salaries of over €600,000 leading to many expensive and big money signings and managers looking for alternative ways of avoiding tax such as the use of off shore shell companies to hide their true wealth.
No one has been exempt from the authorities latest crackdown with Spanish footballs former ‘big three’ of Messi Ronaldo and Neymar as. coming under scrutiny for the courts.
The Spanish authorities case against the ‘Big Three’
- Did not qualify for the Beckham law as he lived in Spain all his adult life
- Messi and his father were both convicted of defrauding the Spanish authorities out of 4.1 million euros using offshore companies registered in Belize and Uruguay
- Settled in July 2016 with Messi and his father repaying the debt as well as a voluntary corrective payment of €5 million
- Prosecutors have asked for a €10 million fine for Neymar alleging that his move from Santos to Barcelona in 2013 was fraudulent.
- This is due to a third-party company DIS owning 40% of his image rights but being denied their real share of the transfer fee when the Brazilian moved to Spain
- DIS were told the transfer fee was only €17 million when in fact revealed to be closer to €25 million.
- Accused of evading tax of €14.7 million between 2011 and 2014 via an alleged shell company called Tollin associates registered in the British virgin islands.
- Also alleged that he did not make declare €3.3 million worth of image rights.
- The case is yet to be settled with Ronaldo using the defence that he paid tax on 20% of his image rights to the Spanish authorities dispute 90% of the money generated coming from abroad.