Earlier on Monday, Real Madrid, Barcelona and five other La Liga clubs were ordered Monday by the European Commission, the European Union’s executive arm, to repay money to the Spanish government over various instances of the state providing aid to the clubs.
European champions Real Madrid, Spanish league champions Barcelona, Athletic Bilbao and Osasuna were ordered to repay state tax credits given to them by Spain that spanned as much as 20 years in total.
According to Spanish media reports, the initial sum total was estimated to be €68.8 million euros. Valencia, Hercules and Elche were deemed to have been given unfair loan bailouts from Spain.
Real Madrid were ordered to repay regarding the settlement on a transfer of land from the City of Madrid to the club that was agreed upon in 1998 which was overvalued by €18.4m.
Real Madrid were ordered to repay the €18.4m to the Madrid City Council for the sale of the land in Las Tablas which wass initially sold to the club in 1998 for €488,000. Real Madrid then sold the land back to the city council in 2011 for around €22.7m.
European Commissioner Margrethe Vestager wrote in her statement that the resale “gave Real Madrid an unjustified advantage over other clubs, which it now needs to pay back.”
The commission determined that Spain had created a tax shelter over the past 20 years for Real Madrid, Barcelona, Athletic Bilbao and Osasuna, who benefited unfairly by being classified as non-profit organizations.
The commission did not detail the total of the fines for the tax credits, but Vestager said that it would be up to the Spanish tax authorities to determine the amounts.
“To remove the undue advantage received in the past, the clubs now have to return the unpaid taxes. Based on available information the Commission estimates that the amounts that need to be recovered are limited (€0-5 million per club) but the precise amounts that need to be paid back are to be determined by the Spanish authorities in the recovery process,” her statement said.
In addition, Valencia clubs Valencia, Hercules and Elche were fined €20.4m, €6.1m and €3.7m, respectively, for loans awarded to them by the State-owned Valencia Institute of Finance (IVF) that required no collateral.
“At the time, those clubs were in financial difficulties,” Vestager’s statement said. “The public guarantee allowed the clubs to obtain the loans on more favorable 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. The state financing was not linked to any restructuring plan to make the clubs viable and none of them implemented compensatory measures to offset the distortion of competition created by the subsidy. In order to restore the level playing field with non-subsidised clubs, Valencia, Hercules and Elche now have to pay back the advantage they received.”