Global football icon Cristiano Ronaldo has made a deal with a court in Madrid over tax evasion charges, accepting an €18.8m (£16.6m, $21.3m) fine.
Ronaldo was accused, in 2017, of defrauding Spanish tax authorities of €14.7m by hiding his income from image rights between 2011 and 2014.
The deal, agreed in advance, includes a 23-month jail sentence. But in Spain, those convicted do not usually do time for sentences under two years.
The non-violent nature of Ronaldo’s offence means he is unlikely to spend any time at all in jail, serving it on probation instead.
The court appearance reportedly lasted “mere minutes” as Ronaldo accepted the deal offered by prosecutors, according to media reports.
Low-hanging fruit
Miles Dean, founding partner of Milestone International Tax Consultants, said: “As possibly the best known football player in the world, Ronaldo is low-hanging fruit for the Spanish tax authorities.
“The threat of a criminal conviction has led him to strike a deal, when his case should really have been heard in the tax courts, as it would appear that it has merits.
“Like Gareth Bale, Ronaldo went to some effort to implement a structure that was not overtly aggressive, unlike some other lesser known players.
“It seems, however, that tax authorities in Spain and the UK are not willing to consider the reality of image rights arrangements. Instead, they would rather see them either as disguised remuneration or, as in Ronaldo’s case, skew the rules to fit the desired outcome, namely, a successful prosecution.”
Spanish crackdown
The case centres around lucrative image rights deals. Prosecutors say the proceeds were funnelled through low-tax companies in foreign nations to avoid paying the required tax.
In 2017, when the allegations first emerged, prosecutors said it was a “voluntary and conscious breach of his fiscal obligations in Spain”.
But Ronaldo’s lawyers said it is all down to a misunderstanding over what was and was not required under Spanish law and deny any deliberate attempt to evade tax.
The deal, struck in June last year, had to be agreed with Spain’s tax authorities.
The authorities have taken a harder line on foreign footballers who fail to pay tax on their worldwide income, especially related to the sale of image rights, as seen in the widely-covered cases of Argentinian footballer Lionel Messi and current Manchester United striker Alexis Sanchez.
Alonso
Ronaldo’s former team mate, Xabi Alonso, was also in court on 22 January in connection with similar offences amounting to about €2m.
Alonso was appearing before the court for the first time. He is facing a potential sentence of up to five years, which means he could serve time behind bars.
Unlike Ronaldo, he has not yet struck any deal with authorities and has maintained his innocence.
Shortly after Alonso’s trial began, the court suspended proceedings to consider whether it was competent to hear the case, or if it should be referred to another criminal court, reports said.
It has since been postponed until further notice.
UK
Spain is not the only country looking to investigate tax evasion surrounding image rights.
In April, the UK’s tax collector HM Revenue & Customs (HMRC) was reportedly investigating 181 footballers at 51 Premier League and Football League clubs in a huge probe into tax avoidance linked to image rights payments.
HMRC struck a deal allowing clubs to pay 20% of wages as tax-free image rights since the start of the 2014-15 season.
But inspectors believe some may have been paying up to 60%.
