By Athena Constantinou, managing director, APC Sports Consulting, Nicosia, Cyprus
In a guilty plea bargain reached with Spanish Prosecutors and approved by a Spanish Judge in Madrid on 7 February 2019, the not-so-special one, Jose Mourinho, has settled a tax fraud case brought by the Spanish Tax Authorities involving the commercial exploitation of his image rights from 2011and 2012, whilst he was the Manager of Real Madrid, amounting to €3.3 million.
By pleading guilty, he has avoided actually serving a one-year suspended jail sentence, which he received, and he also paid a fine of €2 million.
He is stated to have avoided the corresponding Spanish taxes by channelling the undisclosed income through a New Zealand Trust, which he set up in June 2008, the beneficiaries of which were his wife and two children.
The Mourinho Spanish Tax Fraud Case follows closely on the heels of the one involving Cristiano Ronaldo, the rights and wrongs of which is discussed in my post of 24 January 2019 on the GSLTR website.
As mentioned in that post, one should reiterate that tax evasion is a crime; whilst tax avoidance, that is arranging one’s financial affairs in the most tax efficient and legitimate manner, is not. In fact, it is perfectly legal.
But in order to achieve this latter state of affairs, it is necessary to set up a commercially-based legal structure, which is credible and will pass muster with the Tax Authorities.
Something that Mourinho and his advisers clearly failed to do at great financial, personal and reputational expense.
Tax sheltering very valuable image rights is a very sophisticated area of international legal and tax practice and not for the uninformed!
Athena Constantinou may be contacted by e-mail at ‘email@example.com’