Europe court annuls decision calling Spanish football club tax designation state aid

The General Court of the EU ruled Tuesday that a 2016 European Commission decision that called the tax classification of four professional soccer clubs state aid shall be annulled.

Four Spanish soccer clubs, the Fútbol Club Barcelona, the Club Atlético Osasuna, the Athletic Club and the Real Madrid Club de Fútbol, operated as sports clubs since 1990. All other professional soccer clubs in Spain converted to sports public limited companies (SPLC) after the passage of a law in 1990. The 2016 Commission decision found that allowing the four clubs to remain sports clubs allowed the clubs to experience a corporation tax privilege due to being taxed at a lower rate than the SPLCs. The Commission had ordered the clubs to convert to an SPLC and pay back all the tax advantages they received since 1990.

The court found that although the sports clubs were taxed at a lower rate, the SPLCs saw a greater benefit from deductions for reinvesting extraordinary profits. It was ruled that the Commission did not meets its burden of proving the tax structure resulted in an advantage to the sports clubs when taking into account the benefits experienced by the SPLCs.

The court also found that the Commission had erred by only considering tax data from four years, instead of the full period from 1990 and 2015. The Commission also erred by using aggregate data from all sectors and operators.

Source: Jurist