Cristiano Ronaldo, Lionel Messi, Javier Mascherano, Neymar, Adriano Correia Claro, Radamel Falcao…what do these players have in common? Yes, they all played in La Liga. Yes, they all starred for (arguably) the three biggest teams in La Liga: Real Madrid, Barcelona, and Atletico Madrid. And yes, with the exception of Radamel Falcao, they all play in different leagues or are retired now. However, there is a darker commonality that ties these soccer stars together: they have all been convicted of, or pled guilty to, tax evasion in Spanish courts, and they aren’t the only ones. Dozens of players have been accused of, pled guilty to, or have been convicted of tax evasion in Spanish courts and have been sentenced to prison for the offense. Yet these players remain free: Ronaldo moved on to Juventus and then Manchester United, Falcao moved to Monaco and Turkey, Javier Mascherano continued to play for Barcelona before moving to China and retiring in Argentina, and Messi moved to PSG after Barcelona’s financial disaster made his stay at the club impossible. So why do these players remain free after being convicted of such a serious offense?
Spain’s Tax Laws
As previously mentioned in an article discussing Italy’s New Resident Workers Tax scheme, Beckham’s Law is the genesis of this tax evasion issue. The Beckham Law made changes to the Spanish tax code that allowed wealthy foreign workers to reduce their tax burden by exempting income earned outside of Spain and derived from sources other than employment under Spanish tax law. This includes income from investments, passive income streams, and, yes, income from endorsements and sponsorships. The Beckham Law was passed in 2004 and was in effect until 2010, when the Spanish government finally realized that David Beckham hadn’t played for Real Madrid since 2007 and that they were missing out on an enormous amount of tax money from massive endorsement deals.
Either word of the Beckham Law revocation in Spain did not make it to the star players, their lawyers, or their advisors, or they just did not care. Dozens of players were indicted between the 2010 revocation and 2019. In fact, enough people have been convicted to have a full starting eleven, including four Ballon d’Or winners (Ronaldo, Messi, Modric, and Brazilian Ronaldo), and have a Champions League winner manager at the helm (Mourinho).
If all these players are committing tax fraud and evasion, how are they still playing?
Spain’s Penal Code
Players who are convicted or plead guilty remain eligible to play (and not incarcerated) because of Spain suspended sentence guidelines. If a first-time offender is convicted of a crime and sentenced to less than two years in prison, the offender serves a suspended sentence. The suspended sentence means that the offender may remain free and not incarcerated so long as the offender does not re-offend during the suspended sentence time period; however, if the offender re-offends during that period, the offender will be incarcerated by the Spanish government. Regardless of whether the offender re-offends or successfully serves out the suspended sentence, the offender will have a Spanish criminal record.
When looking at this scheme in the context of La Liga players and the sentences for financial crimes, it makes financial sense to attempt to evade Spanish taxes. Crimes like tax fraud in Spain traditionally carry a sentence of less than two years. If the player successfully evades taxes, then the play is able to retain more of their income. If the player is unsuccessful in evading taxes, it is the player’s first offense and the play will be able to serve a suspended sentence, though the player will also likely pay a large fine. These facts are demonstrated in past tax evasion convictions in Spain: Ronaldo was fined $21.8 million and sentenced to a 23-month suspended sentence, Messi was fined $20 million and sentenced to a 21-month suspended sentence, and even Jose Mourinho was fined $2.5 million and sentenced to a one year suspended sentence.
Future Predictions
Will La Liga players continue to attempt to evade taxes in Spain? I believe that is likely, as the benefit of evading taxes in Spain likely outweighs the cost. So far, the potential cost of getting caught is a legal fight, a fine that is a similar amount to the taxes that were avoided, and a suspended sentence that doesn’t require incarceration or any alteration to a La Liga player’s lifestyle. With those minimal consequences, there is no reason for players playing in Spain to change their behavior. With the consequence being the legal equivalent of a slap on the wrist, we can expect La Liga players to continue to evade taxes.
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