Real and Barcelona face tax break investigation

A three-pronged investigation will take place into alleged state aid for several La Liga clubs, including Real Madrid and Barcelona, the European Commission said today.

Athletic Bilbao are one of the teams alleged by a representative of “several European clubs”, in a complaint filed in 2009, to have benefited from unfair tax advantages along with Pamplona-based Osasuna and the world’s two richest clubs by income, Real Madrid and Barcelona.

The four have privileges regarding corporation tax as they are exempt from the general obligation for professional football clubs to convert into limited sports companies.

It means they have a preferential tax rate of 25 per cent compared to 30 per cent.

"Professional football clubs should finance their running costs and investments with sound financial management rather than at the expense of the taxpayer," read a statement from European Competition Commissioner Joaquin Almunia.

“Member States and public authorities must comply with EU rules on state aid in this sector as in all economic sectors.”

The European commission also said that another line of enquiry will be into the controversial deal between the City of Madrid and Real where the club sold their training ground for a considerable profit.

Land valued in 1998 at €595,000 was later put at €22.7 million, the Commission said.

Valencia, Elche and Hercules are also part of an investigation into financial assistance they received from the regional government in the form of loans and bank guarantees.

Spain's secretary of state for sport, Miguel Cardenal, had earlier hit back at accusations the clubs were acting unfairly.

“The taxation for Spanish clubs is a lot more burdensome,” Cardenal told Radio Nacional, comparing the system with other European countries and saying it should be put into context.

“We are talking about entities, and I have up-to-date data, that they paid more than 170 million euros last year,” he said referring to the top flight La Liga clubs.

“I would like the commission, when it talks about a helping hand in Europe, so as not to give the wrong impression, to explain that the taxation of Spanish clubs is considerably more burdensome than their counterparts in Germany, England and France with the law that they have in place, and including Italy.”

Spain’s Economy Minister Luis de Guindos said the government would happily cooperate with the commission’s investigation.

“I think that we will arrive at a satisfactory solution,” he told reporters in Brussels, denying there was a conflict of interest for Almunia, in charge of competition policy for the Commission, as a Spaniard and Athletic Bilbao fan.

“We have complete confidence in the professionalism of Almunia in the handling of decisions over competition.”