The Economic Crime Section of the Prosecutor's Office in Madrid has filed a complaint against the Real Madrid footballer, Cristiano Ronaldo, for four fiscal crimes committed between 2011 and 2014.
The tax fraud involves €14.7 million, claims the Spanish prosecutor.
The Prosecutor says that Ronaldo took advantage of a corporate structure created in 2010 to conceal from the tax authorities the revenues generated in Spain for his image rights, which was a "voluntary" and "conscious" breach of his tax obligations in Spain.
The complaint states that in 2008, Ronaldo gave his agent the power to sign a contract of employment with Real Madrid for the 2009/2010 and 2014/2015 seasons. The contract was initialed by both parties on June 21, 2009.
As a result of this contract, Ronaldo moved a month later to his residence in Spain, thus becoming a fiscal resident as of January 1, 2010.
On November 11th, 2011, the Portuguese football star opted "expressly" for the Spanish tax regime applicable to workers moving to Spain to work. Ronaldo therefore should have submitted his 2011 tax return for Spanish earnings and paid 24% in 2009 and 24.75% in the three subsequent years.
Ronaldo then allegedly ceded his image rights to a British Virgin Islands company, Tollin Associates Ltd, of which he was the sole shareholder.
Tollin then ceded the image rights to Multisports Management Ltd located in Ireland which was dedicated to the management and exploitation of his image rights. The BVI company did no work in this regard, "making the previous assignment to it, completely unnecessary. Its purpose was to create a smoke screen to the income from his image rights from the Spanish Tax Authority."
The Prosecutor's Office states that Ronaldo filed an income tax return for the year 2014 where he recorded an income in Spain between 2011 and 2014 of €11.5 million, "when the income actually obtained from Spanish sources was almost €43 million.”
The tax return also recorded income from capital rather than salary which allowed him to reduce "considerably" his tax bill.
Cristiano Ronaldo could be fined a minimum of €28 million for four fiscal crimes, “three of them aggravated,” according to Spain's Ministry of Finance.
These three aggravated crimes are punishable by two to six years in jail for each instance, if proved, which would trigger a request for a total minimum sentence of seven years for the four alleged tax offenses.
The judge can halve or quarter the penalty if the player recognises the facts and pays the tax due.
Hence, there are two scenarios. If, as in the Messi case, the judge reduced the minimum sentences by half, the total prison sentence would be 3 ½ years.
The second, more favourable outcome, would be if the judge reduced the minimum sentences to one quarter, so that the total prison sentence would be 21 months which the judge has the power to suspend.