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Irish Clubs Have An Unfair Advantage Over Real Madrid And Barcelona

Irish Clubs Have An Unfair Advantage Over Real Madrid And Barcelona
By Gary Reilly Updated

La Liga clubs are on the hook for a fair old chunk of cash this week. Real Madrid have been most heavily hit by a ruling from the European Commission which found that a number of clubs in Spain have unfairly benefitted from state subsidies or other forms of public aid over the past number of years.

It's an extremely interesting development and it's something which speaks to the sometimes clandestine nature of top level sport meeting big business but that's not what we're concerned with at the moment. Instead it's the European Commission's adjoining ruling that Real Madrid, Barcelona, Athletic Bilbao and Osasuna have gained an unfair advantage over their competitors as a result of the fact that they are owned by their socios, club members that, collectively, own the clubs.

Socio-owned clubs are on the hook for the lower 25% tax rate, privately owned clubs are taxed at Spain's full 30% rate. To redress this difference, the EC has ordered each of the four clubs to repay €5 million each. This ruling has not gone down particularly well with La Liga president, Javier Tebas, hitting out at the ruling in AS.

Tebas contends that the added difficulties of running a socio-owned club already put the likes of Real and Barca at a disadvantage in other areas, something which the tax break accounts for. Still, interesting but not exactly fascinating for the vast majority of us. Instead it was where Tebas then turned his attention that will no doubt make a lot of Irish fans sit up and take notice.

The real tax advantage is in Ireland, where clubs pay just 12 percent. That generates unfair competition throughout the EU. In Spain, 'civil societies' have more obligations -- such as presenting bank guarantees and strict financial controls. The EU did not look at this part. We will defend this wherever we can. This looks to me more like a political ruling, not a legal ruling. I am sure it will be overturned.

Sit back and let that one simmer there for a while.

Dermot Corrigan, who covered the story for ESPN, has brought the quotes to wider attention over on this side of Europe and all we can say is we're very glad he has.

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Of course, as many have pointed out, Ireland's 12.5% corporate tax rate is on profits so what's 12.5% of 'we have to lay off most of our staff at the end of the season to help break even'?

We'll find a dodgy accountant and get back to you on that one.

It would be fair to say the irony of Tebas' comments have not been lost on anyone.

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