European rule out seven state in Spain that will paid million of euro back including real and barca

European rule out state in spain

Real Madrid have been told by the European
Commission that they owe £15.4m

The European Commission has ruled that
seven teams in Spain - including Real Madrid
and Barcelona - must pay back millions of

euros handed out in state aid and/or
favourable tax rates by local governments.
The Commission claimed the cash received
for a variety of reasons, ranging from re-
valuation of land to privileges in corporate
taxation, gave the clubs concerned an unfair
advantage over other teams, in breach of EU
state aid rules.
As a result, Spain must now recover the
illegal state aid amounts from Barcelona,
Real Madrid, Valencia, Athletic Bilbao,
Osasuna, Elche and Hercules.
Commissioner Margrethe Vestager, in charge
of competition policy, said: "Using tax payers'
money to finance professional football clubs
can create unfair competition.
"Professional football is a commercial activity
with significant money involved and public
money must comply with fair competition
rules. The subsidies we investigated in these
cases did not."
Barcelona are also among the Spanish clubs
to be told to pay back money
EU state aid rules apply to public
interventions in the market to ensure they do
not distort competition by selectively
favouring one market participant over
another. Professional sport is an economic
activity.
The first investigation concerned tax
privileges in favour of Real
Madrid, Barcelona, Athletic Bilbao and
Osasuna.
In Spain, professional football clubs are
considered as limited liability companies for
tax purposes. However, these four clubs were
treated as non-profit organisations, which
pay a five per cent lower tax rate on profit
than limited liability companies. The four
clubs benefited from this lower tax rate
during over 20 years, without an objective
justification.
Spanish tax authorities will determine how
much Athletic Bilbao will have to repay
In a second investigation, the Commission
examined a land transfer between Real
Madrid and the City of Madrid. The inquiry
determined, based on an independent study,
that the land affected by the transaction was
overvalued by 18.4m euros. This gave Real
an unjustified cadvantage over other clubs,
which it now needs to pay back.
Finally, the Commission investigated
guarantees given by the state-owned
Valencia Institute of Finance (IVF) for loans
granted to three Valencia football clubs
(Valencia, Hercules and Elche).
At the time, those clubs were in financial
difficulties. The public guarantee allowed the
clubs to obtain the loans on more favourable
terms. As the clubs paid no adequate
remuneration for the guarantees, this gave
them an economic advantage over other
clubs, who have to raise money without state
backing.
Valencia say they have not yet been officially
notified of the EC's decision
The amounts to be paid back are: Real
Madrid, 18.4m euros (£15.4m); Valencia,
20.4m (£17.1m) euros; Hercules, 6.1m
(£5.1m) euros and Elche, 3.7m (£3.1m)
euros. The fees to be paid by Barcelona,
Athletic Bilbao and Osasuna will be
determined by Spanish tax authorities.
Valencia were the first of the seven clubs to
react to the news, saying in a statement: "In
relation to the sanction of the European
Commission to Valencia Football Club for
receiving state aid in 2009, the Valencia
Football Club wishes to state that the
decision of the European Commission, which
has today been notified to the media, has not
yet been forwarded to the Club. When the full
resolution content is received, it will be
analysed.
"Meanwhile, Valencia Football Club wishes to
emphasise that the decision of the European
Commission is not final and the club, once it
has analysed the content, reserves the right
to appeal before the General Court of the EU
in Luxembourg."