The Spanish Supreme Court has Upheld the appeal 5730/2021 brought by the sports club Real Madrid Club de Fútbol against the judgment delivered on 26 May 2021 by the Fifth Section of the Contentious-Administrative chamber of the National High Court, dismissing appeal no. 424/2020 and annuling the judgment under appeal.
The Central Economic Administrative Court (TEAC) rejected the economic-administrative claim filed in relation to tax concept Value Added Tax (VAT), corresponding to the period 2014-2015. The main issue of the dispute was the tax treatment of payments to players’ agents by clubs and their possible consideration as a payment on behalf of the player, in particular in relation to the VAT paid by the club for the professional services of the intermediary.
Real Madrid claimed that if the club is considered not to be the recipient of the services rendered by the intermediaries, it is necessary not only to deny the deductibility of the services rendered by the intermediaries, but also to recognise the club’s right to a refund of the fees unduly borne by the Club and paid to the Treasury by the intermediaries, together with interest for late payment, as appropriate.
On the contrary, the Inspectorate had the view that even if the monetary transaction is between the club and the agent, the agent is in fact providing a service to the player and the club pays this service to the agent on behalf of the player. Thus, the amounts paid by the club to the agent or representative should be considered to be as a higher monetary remuneration of the player as employment income, so that the fee borne by the club is not deductible.
The Court finally upheld the Real Madrid´s cassation and annuled the judgment.
Real Madrid was represented by Tax partner and expert in Tax Litigation Ester Zamarriego
