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Barcelona agrees €5.5m settlement for two tax offences

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Barcelona agrees €5.5m settlement for two tax offences

The club has reached a deal with the Spanish authorities to solve the tax issues in the Neymar signing

As Cadena Ser reported a few weeks back, numerous sources can now confirm that FC Barcelona has reached a settlement agreement with the prosecution and the Spanish Tax Office in the Neymar Case. The club will assume all responsibility and pay a fine of €5.5 million for two tax offences, but the president, Josep Maria Bartomeu, and his predecessor, Sandro Rosell, are cleared of all charges. This deal will have to be ratified by the board of the Catalan club.

First, the deal excludes the 2014 tax offences alleged by the prosecution from the case. As this was the only issue that involved Bartomeu as president of the club, this exonerates him from any penal responsibility.

Secondly, the accusations accept that when Barça made a complementary tax statement in 2014, Sandro Rosell had not yet been notified that he was investigated by the National Court in this case. This exonerates the former president of any judicial responsibility.

As Barça has made that complementary statement on February 24th, 2014 for the amount of €13.5 million – superior to the approximately €9.2 million that the prosecution demanded of them in back taxes for the years 2011 and 2013 – in order to cover this €5.5 million fine the club would just have to pay approximately €1.2 million now.

Diari Ara reports that from an accounting point of view, in the 2013/2014 budget Barça established a €11 million provision to cover possible sanctions and fines resulting from the lawsuits it was involved in, including this one. This provision covers the current fine, with the remainder being made available to cover the rest of the cases that are currently open.

Sources close to the club tell Diari Ara that this settlement favors Barça for three reasons. First, because if the case had reached the trial phase, sooner or later the blaugrana club would have had to deposit a bond of close to €90 million to cover its eventual responsibilities – €63 million from the fines and compensations requested by the prosecution from all the defendants plus an additional 30% as required by the law.

Second, the deal saves the club close to €17 million of the fine that the prosecution demanded from it. And third, the settlement puts an end to a long judicial process and gives the club a certain advantage in the second trial open involving Neymar’s transfer, the complaint made by the Brazilian investment fund DIS, because the sentence will establish the fact that what the club paid Neymar was salary and not transfer fee.

So how much was Neymar’s transfer fee? If we consider the fact that this deal assumes that the sums of money under investigation are not a part of the fee, but are in fact salary for the player, Neymar would have only cost Barça the €17 million it paid to Santos in 2013, plus the €2 million bonus they had agreed to pay the Brazilian club in case Neymar was a Ballon D’Or finalist, plus this €5.5 million fine it has to pay now for not paying the proper taxes in 2011 and 2013. The other side of this is that the €40 million that Neymar’s father’s company received for the transfer and all the money resulting from the various contracts between the club and Neymar Sr.’s firms (for example the scouting contract) are considered salary.

The judge in charge of the case Juan Emilio Vilá Mayo gave the defense attorneys and the prosecutors until the end of June to explore a deal that would avoid the trial. During the last weeks the contacts between the two parts have been accelerated, with José Ángel González Franco, Cristóbal Martell and Roman Gómez Punti representing the defendants. The last days were intense, with the prosecutor in charge of the case, the coordinator of the economic crimes area, Pedro Ariche, having various meetings with his superiors to polish all the details.

Now an agreement sentence must be issued which will lead to a formal condemnation of Barça for two tax offences, in the form of a fine, and which may lead to the loss of certain future allowances and subventions.

Given the fact that Barça assumes that someone made a mistake in the process of Neymar’s transfer, the club will take the opportune measures to look for the people responsible for this error. Blaugrana sources point fingers at the fiscal consultants that validated Neymar’s signing, the Segarra-de Figarolas firm.

This deal will of course leave many to wonder whether it is ethical or moral for the club to be made to pay for the mistakes of its administrators while they walk away scot free. Many candidates that ran in last year’s elections opposing Bartomeu have today publicly stated that if this deal goes through they will see what their options are for defending the club’s interests, with Joan Laporta saying that he “reserves his right to take any legal actions required for the defense of the club’s interests and that of its associates.”

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