Spain: Former FC Barcelona player Luis Enrique to face criminal penalties on tax fraud allegations

Prosecutors in the proceedings initiated against former Real Madrid and FC Barcelona player Luis Enrique Mart?nez have claimed that the player shall receive a three-month prison sentence, to be substituted by a ?68,000.00 fine due to the fact that this is the player’s first criminal infringement and that the prison serving sentence should in any case be for a period not exceeding one year. The prosecutors also claim that the player shall pay an additional fine of ?50,000.00.

The facts being judged are as follows: in 1997 Luis Enrique Mart?nez entered into a contract with Nike BV, a company resident in the Netherlands, whereby Nike BV would pay a sponsorship fee to the player in
consideration for the player’s use of Nike’s football shoes. In 1998, in
connection with the player’s extension of his contract with FC Barcelona,
the club managed to obtain from Nike BV (at that time one of the club’s
sponsors) an increase in the sponsorship fee payable by the latter to the player. In that connection, Nike BV made an additional payment of
?600,000.00 to Foot Force Sport, a company resident in the Netherlands
Antilles and wholly controlled by Luis Enrique Martinez. The payment was
made to the Antillean company’s bank account in Switzerland. In connection
with the audit of the player’s Individuals’ Income Tax return for 1998, the Revenue Service took the view that the payment of ?600,000.00 should be attributed to the player himself rather than the Antillean company. The player, on his part, initially claimed that such payment should have been classified as remuneration of his personal services made by Nike BV on behalf of FC Barcelona. He thus claimed that such payment should have been subject to withholding tax, which would have shifted the tax liability to
the club itself. In the context of a plea bargain he later dropped that
view, accepted the facts and the classification of income made by the
Revenue Service and paid the tax due.