Cristiano Ronaldo paid the Spanish tax man £12.1million and accepted a two-year suspended prison sentence this week, according to Spainish radio station Cadena Cope.
It seems the 33-year-old Juventus forward is wasting no time in clearing debts and cutting all ties with Madrid and Spain and there are even suggestions he has plans to pull his business interests out of the city.
Spanish radio station Cadena Cope reported this week that he has deposited the £12.1m and will also pay a further £4.7m in fines and costs. He has also accepted a two-year prison sentence which he will never have to serve because first offences for admistrative crimes involving terms of two-years or less are not custodial in Spain.
Tax troubles in Spain
For a long time, Spanish fiscal law turned a blind eye to image rights companies being set up by players outside of Spain.
That enabled players to only pay tax on what they earned in the country with money from image rights designated as foreign income.
In Ronaldo’s case, his image-rights income was allegedly managed by a company in the British Virgin Islands, a tax haven.
Spanish tax authorities changed their tune in 2014 and started cracking down on the practice and a raft of investigations began.
In the last three years, a host of La Liga’s biggest stars have had to face accusations similar to that of Ronaldo.
They include, but are not limited to:
One of the primary reasons for leaving Spain has always been his anger at tax authorities for taking him to court for fiscal fraud and just one week after his departure to Italy he has wiped his debt with the treasury.
The player is also understood to have put his £4.8m Madrid mansion in the exclusive ‘La Finca’ neighbourhood on the market and is seriously contemplating closing all his business interests in the Spanish capital.
It is a dramatic cutting of ties that could include abandoning a hotel project in the city’s emblematic avenue ‘Gran Via’.
Ronaldo, in a joint venture with Portuguese company Pestana, had gained a building license earlier this year to convert one of Gran Via’s historic buildings into a 160-room luxury hotel with roof-top bar but Portuguese media now say that project could be shelved.
Ronaldo has always protested his innocence against claims he wilfully deceived the Spanish treasury by not declaring image rights earnings between 2011 and 2014.
He was furious at being treated like a criminal despite the fact he voluntarily made attempts to put his tax affairs in order in 2014 by making an extra payment of £5m.
He felt the prosecution’s accusation was a result of a difference of interpretation of Spain’s complicated tax laws on image rights and should not have resulted in criminal proceedings.
He was determined to leave Spain last summer but ended up staying because Real Madrid refused to lower his €1bn (£890m) release clause.
With the prospect of a new contract with the club he had then settled on staying in Spain and paying his tax debt, with the help of a new signing bonus, but when Madrid’s contract offer arrived in January it did not meet his expectations.
This summer the club were willing to bring his release clause down and with Juventus paying Real Madrid £100m he was able to leave.
His tax situation will be far more favourable in Italy. A new fiscal law in the country allows tax contributors moving to Italy to pay as little as €100,000 (£890,000) in taxes on earnings made outside of the country – something that will be of huge benefit because of his vast commercial income from around the world.
The head of the Spanish League, Javier Tebas, said this week: “His net earnings will be higher in Italy than in Spain despite being paid the same gross salary. [On that basis] it was difficult for Madrid to compete with what Juventus were giving him.’