The National Court has dismissed an appeal filed by the Valencia Football Club against several tax resolutions that require it to return money to the Treasury. The appeal, whose amount sets the judgment at just over 2.23 million euros, is based on a review of four fiscal years (between 2011 and 2014) in which the Central Delegation of Large Taxpayers considered that the sports club had incorrectly deducted large sums of VAT. The sentence, dated March 23, is appealable.
The substance of the matter concerns the relationship between the teams and the representatives of the players. Valencia understood that the income it made directly to the agents formed part of the provision of a service to the club, while the representative mediated between him and the footballer. Therefore, a deduction was applied to the VAT that was paid to them. The Treasury, on the other hand, argued that the agents work for the players, and that when a team makes an income for them, it does so as part of the player’s compensation. According to this interpretation, neither the club can deduct any VAT, nor can the player (because he is a final consumer and is not a taxable person). And in addition, the footballer would have to declare that amount as income from work, which increases the tax base in the Personal Income Tax (IRPF).
The matter has already been the subject of several pronouncements of the Central Economic-Administrative Court (TEAC) between 2019 and 2021. Although it estimated some resource from Valencia and endorsed its interpretation in some operations, it aligned itself with the point of view of the Ministry of Finance. In fact, the appeal presented by the football club before the National High Court was aimed at two of the resolutions adopted by the TEAC.
But the ruling of the Court, in which Alicia Sánchez Cordero has acted as rapporteur, is a setback for Valencia’s arguments. The four magistrates of the fifth section of the Contentious-Administrative Chamber consider that “Valencia Club de Fútbol had the necessary material and human resources to have applied the regulations correctly”. The sports entity, they add, “did not put the necessary diligence in complying with tax obligations when knowing the rule that regulated the remuneration of player agents, no matter how much it insists.”
The judges point out that Valencia’s point of view on compliance with the FIFA regulations (the international football federation, which regulates the remuneration of representatives) “does not imply a reasonable interpretation of the rules.” The club argued that in the years analyzed it was usual to hire athletes ignoring those regulations and, furthermore, that FIFA itself changed its rules in April 2015. But accepting this last reasoning, the ruling points out, “would be as much as interpreting the intention of the contracting parties in attention not to what the regulation in force allows, but the future one”.
Although the four magistrates accept that “there may be the case of direct contracting of the club with agents”, in which case they can be considered intermediaries who act in the interest of the club, they reject that this is the assumption that Valencia is discussing. “If the legal relationship is between the agent and the player, there is no deduction of fees when services are provided by and for the player,” states the ruling, which is based “on the representation contracts registered in the Royal Spanish Football Federation in which the player designates a specific agent as his representative”. For all these reasons, the court dismisses Valencia’s resources and imposes the payment of legal costs, although it leaves the door open to an appeal. The club, in consultation with this newspaper, has not specified whether it will keep the matter alive in court.
He knows in depth all the sides of the coin.
Exclusive content for subscribers
read without limits