Apr 25, 2012, 06.59 PM IST | Source: Reuters

Spain agrees roadmap for football clubs to settle tax debts

The Spanish government and the football league (LFP) have agreed rules designed to pave the way for clubs to pay off hundreds of millions of euros in tax debts in a case that has attracted the attention of European Union antitrust officials

Spain agrees roadmap for football clubs to settle tax debts

The Spanish government and the football league (LFP) have agreed rules designed to pave the way for clubs to pay off hundreds of millions of euros in tax debts in a case that has attracted the attention of European Union antitrust officials.

Clubs in Spain's top two divisions, many of which are in dire financial straits, owe some 750 million euros to the tax authorities plus another 600 million to the social security system.

Spanish sports minister Jose Ignacio Wert, secretary of state for sport Miguel Cardenal and LFP president Jose Luis Astiazaran briefed reporters on the new rules on Wednesday and the LFP said in a statement that clubs which transgressed could be barred from competition.

If the LFP itself failed to enforce the rules its directors could be removed and income from lottery sales withheld, the statement added.

In addition, from the 2014-15 season, clubs will be obliged to set aside 35% of revenue from selling audiovisual rights as a guarantee against their tax obligations.

They could even be forced to sell players to raise cash in a process overseen by a joint commission made up of government, LFP and club officials.

"Economic control will be strict, as well as the sanctions regime," the LFP said.

"It's about designing a road map which will allow a definitive change in the current landscape under which (tax) debt will be reduced over time until it no longer exists."

RULE VIOLATION

A European Commission competition policy spokesman confirmed on Wednesday the EU's executive body was looking at whether the Spanish clubs' tax situation violated rules on state aid, after receiving a complaint.

"We asked for information from the Spanish government," spokesman Antoine Colombani said.

"We are looking at the reply for the moment. There are no plans at the moment to launch a formal investigation," he added. He declined to identify the complainant.

The LFP rejected the idea that clubs had received state aid to help ease their debt burdens.

"There has not been and there will not be any state aid to reduce debts owed by football clubs," it said. "The debts of football will be settled by football."

Spanish authorities are keen to call in the clubs' tax and social security debts as part of a sweeping austerity drive aimed at meeting fiscal targets agreed with the EU.

Cardenal said this month he was hopeful the clubs would be able to settle their obligations by around 2020.

A study by a professor of accounting at the University of Barcelona published this month showed that the 20 clubs in Spain's top division had total combined debts of about 3.53 billion euros at the end of the 2010-11 season, up from 3.48 billion the previous year.

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