This is the indictment of the Prosecutor’s Office in the procedure followed by the Court of Instruction number 35 of Madrid, with a view to the future trial for which there is no date yetas reported by the Public Ministry, reports Efe.
The Prosecutor’s Office charges the Real Madrid coach two crimes against the Public Treasurysince although Ancelotti stated that he was a resident in Spain and reflected that his domicile was in Madrid, he only recorded in his income tax returns the personal work remuneration received from the Madrid club and omitted the performance corresponding to the exploitation of his image rights that it had transferred to other entities.
In its letter, the Public Ministry emphasizes that “with the in order to avoid taxation on the income from said image rights“, both those received by Real Madrid and other brands for various events, the coach resorted to a “complex” and “confusing” network of trusts and companies filed to channel the collection of image rights.
It states that Ancelotti signed a contract as coach of Real Madrid on July 4, 2013 until June 30, 2016, for which he would collect work income and income derived from the transfer of image rights to the club. The contract ended in May 2015 but Ancelotti continued to live in Madrid until the end of that year.
The Prosecutor’s Office maintains that “in order to avoid taxation on the income from said image rights”, the technician resorted to a “complex” and “confusing” network of trusts and intermediary companies, so that “simulated” the transfer of his image rights to entities “lacking real activity” and operating capacity that were domiciled outside of Spain.
For the Prosecutor’s Office, the Madrid coach was pursuing “the opacity in the face of the Public Treasury Spanish company and the concealment of the real beneficiary of the income from his image rights, so that neither he himself nor any of said companies would have to pay taxes on the large amounts received in Spain or outside our country.
Details that Ancelotti signed on July 1, 2013 -just before being signed by the white club- a private contract in which he transferred his image rights to the entity Vapia Limited for a period of ten years and a price of 25 million euros. He was the attorney-in-fact and managed the rights.
An annex to this agreement was later formalized which modified the term to only three years and the purchase price of the image rights to one million euros.
Likewise, on July 4, 2013, and “parallel” to his signing as coach of Real Madrid, the accused was granted a private contract with the club in which it transferred 50 percent of its image rights to the sports entitywhile the other 50 percent was held by an “unnamed” and “undetermined” company that acted on its behalf.
This company turned out to be Vapia LLPdomiciled in London, and not the aforementioned Vapia Limited, which is a company incorporated in the Virgin Islands, a circumstance that was not communicated to Real Madrid until a year later.
«In this way, the accused used the company Vapia LLP so that it formally presented itself to Real Madrid as the owner of the image rights despite the fact that it had not even been formally attributed them, since the aforementioned transfer contract of 1 July 2013 was with Vapia Limited,” the letter states.
Ancelotti presented his corresponding personal income tax returns but omitting “any performance corresponding to the exploitation of their image rights (…) thus arriving at declarations with negative quotas”, with a negative balance of 39,575 euros in the 2014 financial year and 529,076 in 2015, amounts that were returned by the Tax Agency in both cases.”
The Prosecutor’s Office specifies that the income derived from the transfer of image rights amounted to income of 1,249,590 euros in 2014 and 2,959,768 in 2015.
Furthermore, according to the Public Ministry, the technician also He omitted in his statements the ownership of two properties abroad.
Interview between Time.news Editor and Legal Expert on Ancelotti’s Tax Indictment
Time.news Editor: Today, we’re diving into a pressing legal issue involving Carlo Ancelotti, the renowned coach of Real Madrid. Joining me is Dr. Elena Martinez, a tax law expert with extensive experience in international taxation. Welcome, Dr. Martinez.
Dr. Elena Martinez: Thank you for having me. It’s a pleasure to discuss this topic.
Editor: The indictment from the Prosecutor’s Office in Madrid alleges that Ancelotti is involved in two crimes against the Public Treasury, pertaining to his image rights. Can you provide some context on what this means in a legal sense?
Dr. Martinez: Certainly. In Spain, like many countries, individuals are required to declare all sources of income, including that derived from image rights. The Prosecutor’s Office claims that Ancelotti omitted the earnings from his image rights when filing taxes, which can lead to serious legal repercussions, particularly if they suspect intentional evasion.
Editor: The article mentions a “complex” and “confusing” network of trusts and companies that Ancelotti allegedly set up to manage his image rights. What are the legal implications of such structures?
Dr. Martinez: Using complex structures isn’t inherently illegal; many athletes and high-profile individuals do this for legitimate financial planning. However, if these structures are used to obscure income or evade taxes, that’s where the legal issues arise. The allegation is that Ancelotti used these entities to create opacity regarding who ultimately benefits from the income and to avoid paying taxes in Spain.
Editor: The indictment states that Ancelotti transferred his image rights to a company called Vapia Limited. What do you make of this transaction, given the subsequent modifications to the contract?
Dr. Martinez: Modifications to contracts, especially those involving payment amounts and durations, can raise red flags in tax investigations. Here, the dramatic change in the sale price of image rights from 25 million euros to just 1 million euros could be interpreted as an effort to mitigate tax obligations. When such significant adjustments occur, tax authorities often scrutinize the motives behind them.
Editor: The mention of “simulated” transfers of image rights and entities “lacking real activity” raises questions. How does a tax authority evaluate whether a company legitimately conducts business?
Dr. Martinez: Tax authorities look for tangible business activity, such as evidence of employees, operations, and actual income generation. If a company appears to exist only on paper without real economic activity, it may be classified as a shell company. That could imply that Ancelotti was attempting to obscure his earnings from the Spanish tax system.
Editor: With such high-profile cases, there’s often public scrutiny. How do public figures typically navigate their finances to minimize risk?
Dr. Martinez: Public figures should ideally engage transparent financial practices and seek expert legal advice to ensure compliance with tax laws. Utilizing legitimate structures can help them manage both their wealth and tax liabilities effectively without crossing legal boundaries. However, it’s essential to be cautious—what might seem like strategic tax management can quickly turn into perceived evasion if mismanaged.
Editor: If convicted, what potential penalties could Ancelotti face?
Dr. Martinez: Penalties can vary significantly depending on the severity of the offense and whether it’s classified as a misdemeanor or felony. For serious tax crimes in Spain, penalties can include substantial fines and even imprisonment. However, the specifics would depend on the case’s details and whether authorities deem the actions as willful fraud.
Editor: Before we close, what advice would you give to our readers regarding similar financial undertakings?
Dr. Martinez: Always prioritize transparency and legal compliance. Consult with tax professionals when dealing with complex financial structures, and stay informed about legal obligations to avoid potential pitfalls. It’s much easier to navigate these waters collaboratively and legally than to deal with the repercussions of tax evasion.
Editor: Thank you, Dr. Martinez, for your insights on this complicated issue. It will undoubtedly be interesting to see how this case unfolds.
Dr. Martinez: My pleasure! I’m looking forward to seeing the outcome as well.