READ: football star, Cristiano Ronaldo accused of €15m tax fraud in Spain

Real Madrid star allegedly used business structure to hide image rights income

Soccer star Cristiano Ronaldo faces allegations of tax fraud in Spain. Photograph: Anderson Dodd/AFP/Getty Images

Soccer star Cristiano Ronaldo faces a lawsuit filed on Tuesday by Spain’s prosecutor’s office in Madrid for allegedly defrauding Spanish tax authorities of €14.7 million between 2011 and 2014.

The prosecutor’s office said in a statement that the Real Madrid forward had knowingly used a business structure created in 2010 to allegedly hide his image rights income in Spain.

This involved a “voluntary” failure to comply with his tax obligations in Spain, the statement from the office’s economic crimes section said. The four counts of tax fraud were based on a report from Spain’s tax agency, it said.

Real Madrid declined to comment and calls to the agency representing Ronaldo, Gestifute, went unanswered.

Ronaldo, who led Real Madrid to their 12th European Cup earlier this month, is the latest in a long line of soccer players in Spain - among them Barcelona’s Lionel Messi and Neymar - who have been caught up in cases over tax or transfers.

Between 2005 and 2010, foreign players in Spain were protected under the so-called “Beckham law” allowing them to curb their taxes. But as the financial crisis bit deeper, that exemption was lifted, paving the way for the cases.

The prosecutor’s office alleges that Ronaldo had defrauded the tax authorities of €1.4 million in 2011, €1.7 million in 2012, €3.2 million in 2013 and €8.5 million in 2014.

Ronaldo, who is from Portugal, became a Spanish tax resident in January 2010 and in November 2011 opted to follow the Spanish tax regime that applies to foreigners working in Spain, the statement said.

He should have paid a tax rate of 24 per cent in 2011, and 24.75 per cent in the three following years, it said.

Image rights

The prosecutor said after Ronaldo signed a contract to join Real Madrid in December 2008 he ceded his image rights to a company called Tollin Associates Ltd, domiciled in the British Virgin Islands and in which he was the only stakeholder. 

Tollin Associates then ceded his image rights to a company in Ireland called Multisports&Image Management Ltd which was responsible for managing them. Tollin Associates itself had no business activity, the statement said.

“Ceding image rights to (Tollin Associates) was completely unnecessary and it’s only purpose was to create a screen to conceal the totality of his image rights income from the Spanish tax authorities,” the statement said.

The prosecutor’s office filed the lawsuit against Ronaldo on Tuesday to a court in the Madrid district of Pozuelo de Alarcon.

Ronaldo finished the soccer season scoring two goals in a 4-1 victory over Juventus in the Champions League final to become the tournament’s top scorer with a total of 12 goals.

Afterwards, Spanish sports newspaper Marca called Real Madrid, who also won La Liga this year, “masters of the universe”.

In May, Spain’s Supreme Court rejected an appeal by Messi and stood by a Catalan regional court’s 21-month prison sentence for defrauding authorities of €4.1 million on image rights. He is unlikely to go to prison as under Spanish law sentences under two years can be served under probation.

Spain’s high court in May cleared Neymar of fraud but he still faces a corruption trial in Spain in connection with the value of his 2013 transfer from Santos to Barcelona. He has denied wrongdoing.