Barcelona, Real Madrid and two other Spanish clubs will have to pay millions of euros in back taxes, Europe's top court said on Thursday, in a win for EU competition enforcers in their fight against tax avoidance.
The European Commission in its 2016 ruling said that Barcelona, Real Madrid, Athletic Bilbao and Osasuna enjoyed a 25% tax rate for more than 20 years, giving them an unfair advantage over the 30% norm for sports companies.
The four clubs, which enjoyed the lower tax rate because they were treated as non-profit organisations instead of professional football clubs with limited liability, were ordered to pay up to 5 million euros ($6 million) each in back taxes.
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Barcelona subsequently challenged the EU decision and got the General Court to strike it down in 2019 on the grounds that the EU competition watchdog had not shown to the required legal standard that the measure conferred an advantage on its beneficiaries.
The commission then appealed to the Luxembourg-based Court of Justice of the European Union (CJEU), saying that the lower tribunal erred in putting a heavy burden of proof on enforcers to prove that the clubs had an economic advantage.
CJEU judges agreed with its arguments.
"The aid scheme at issue was, from the time of its adoption, liable to favour clubs operating as non-profit entities over clubs operating in the form of public limited sports companies, thereby conferring on them an advantage capable of falling within the scope of Article 107(1) TFEU," the court said, referring to EU state aid rules.
The case is C-362/19 P Commission v Futbol Club Barcelona.
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