Alex Trelinski
REAL Madrid coach Carlo Ancelotti testified in court on Wednesday in his tax fraud trial where he’s accused of illegally pocketing €1 million over a decade ago.
Prosecutors want him jailed for four years and nine months plus a fine of €3.2 million.
The tax row involves image rights revenues with the accusation that Ancelotti created a ‘confusing’ and ‘complex’ system of shell companies to hide the earnings.
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They say he ‘simulated’ the transfer of his image rights to entities ‘without any real activity’ that were based outside of Spain as a tax dodge.
The Italian, 64, returned to Real Madrid four years ago.
Ancelotti told the Madrid Provincial Court about his deal when he joined the club in 2013.
“I negotiated six million net for three years. I always do business on a net basis. Real Madrid proposed an 85-15 payment structure, in which I would charge 15% as image rights.”
“I have never given importance to this. For a coach, image rights are not so important. I only cared about the net six. My English advisor contacted Real Madrid and they built this structure,” he testified.
It resulted in him getting 85% of his salary directly from the club, while the other 15% went through a company called Vapia, based in British Virgin Islands.
Vapia transferred the money to him, which was not taxed as work income, which has drawn the ire of Spain’s Tax Agency.
“I have never thought that it could be a fraud. Never,” said Ancelotti, who said he was aware of a issue when the Tax Agency told him in 2018 that he was being investgated.
“If I’m here, it’s because things weren’t so right,” he added.
Though he has already settled his €1.2 million tax debt, its criminal issues that are being litigated in the trial.
Another matter is whether or not he could classified as a Spanish tax resident in 2015- the year he was sacked by Real Madrid.
He was fired on May 25 and left the country four days later, which according to him means he did not live in Spain for the 183 required days that year to pay taxes.
An expert says he had only spent 155 days in the country but prosecutors think otherwise as he kept a rental country active for his Puerta de Alcala apartment.
Ancelotti’s explanation is that he was tied into a year-long contract and had to give three months’ notice which meant he had to carry on paying until October, even though he was not there.
The trial is expected to end on Thursday.
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