Soccer Star Ronaldo Pleads Guilty to Tax Fraud in Spain
January 22, 2019
CBC News is reporting that Cristiano Ronaldo, who for many years played for football powerhouse Real Madrid, has received a 2-year suspended sentence and €19 million ($28.7 million CAD) fine after pleading guilty to tax fraud in Spain.
One of the World’s Best Soccer Players
Ronaldo is a five-time Champions League winner and five-time winner of Europe’s Ballon d’Or, a prestigious soccer award given annually to the world’s best player.
According to Forbes, he is the third-wealthiest athlete in the world, with estimated earnings of more than € 95 million annually. Ronaldo’s lifetime contract with Nike is worth upward of $1 billion.
The investigation into Ronaldo’s tax scheme began in 2015. Based on information gathered during the inquiry, he was eventually accused of four counts of tax fraud from 2011-2014, specifically, of using shell companies in low-tax jurisdictions outside of Spain to shelter income he earned from image rights. Taxes were apparently paid on the salary he earned while playing for Real Madrid and living in the Spanish capital.
Authorities claimed that Ronaldo’s actions constituted a “voluntary and conscious breach of his fiscal obligations in Spain”.
In a previous 2017 court appearance, the soccer player spent approximately 90 minutes answering questions. His lawyers argued that the whole issue stemmed from a “misunderstanding” over what was and was not required under Spanish law. They denied any deliberate attempt to avoid paying taxes.
Ronaldo offered to pay authorities €14 million, but the Spanish government rejected this offer. Instead, the plea deal was reached. As part of the deal, Ronaldo acknowledged four incidents.
What Will This Mean for The Player?
Ronaldo, who as of last summer plays for Juventus, will likely not have to serve any prison time. Under Spanish law, a two-year sentence for a first-time offence can be served on probation.
Other Players Also Being Investigated
In 2010, in the midst of a deepening financial crisis, Spain eliminated a tax exemption which had colloquially been known as “Beckham’s Law” and which had allowed soccer players to mitigate the amount of taxes they had to pay. As a result, a number of soccer players came under scrutiny:
- In 2017, Barcelona player Lionel Messi was given a 21-month prison sentence on similar charges to those faced by Ronaldo. He was allowed to pay a fine in lieu of prison time;
- In 2018, Real Madrid player Marcelo Vieira admitted to tax fraud and accepted a 4-month suspended jail sentence and €750,000 fine after using foreign accounting firms to handle his earnings.
Most recently, Ronaldo’s former Real Madrid teammate Xabi Alonso (who played for Real Madrid from 2009 to 2014) also appeared in court accused of similar offences totalling approximately €2 million. The player has yet to strike a deal and has maintained his innocence, telling reporters: “I’ve done everything correctly, never tried to hide anything,” he said. “I’m confident justice will be done.”
Alonso faces up to five years in prison and a fine of more than €4 million. The longer sentence sought could potentially mean that the player may face actual prison time.
How Can Feigenbaum Law Help?
At Feigenbaum Law, our highly skilled team provides a range of cross-border tax services to top athletes and entertainers in Canada and the United States. Our experience and extensive knowledge of both countries’ tax systems have made us trusted advisors to producers, writers, musicians, actors, directors, professional athletes, as well as agents, coaches, and managers who routinely come to us for assistance with their tax and legal work. Our knowledge of jurisdictional laws and regulations can help lower your overall tax risk and yield sizable tax benefits.
Contact us to learn more about how we can help or call us at (905) 695-1269 or toll free at (877) 275-4792.