On Thursday 4 March, the Court of Justice of the European Union (CJEU) ruled that the tax regime from which FC Barcelona (FCB), Real Madrid, Athletic Club Bilbao and Club Atlético Osasuna (Pamplona) have benefited for 25 years is illegal Spanish State Aid, definitively dismissing an appeal by FC Barcelona.
With its judgment in Case C-362/19 P, Commission v FútbolClub Barcelona, the Court sets aside the 2019 judgment of the General Court of the European Union, which itself annulled the Commission’s decision to classify the tax regime enjoyed by the four professional football clubs as State Aid. The Commission’s decision labelled the tax advantage as unwarranted and requested recovery of the unpaid taxes.
A Spanish law of 1990 required professional sports clubs in Spain to become limited sports companies, with exceptions granted to those companies that had made a profit in the financial years before the law was passed. The exception applied to the four clubs, so they chose to continue operating, as not-for-profit legal entities. In so doing, they benefited from a specific tax rate on their income.
This rate remained lower than the rate that applied to limited sports companies until 2016. On 4 July 2016, the Commission deemed that, by introducing a corporate tax advantage for the four clubs concerned, these rules constituted an unlawful aid scheme that was incompatible with EU law. It ordered Spain to end the scheme and recover the individual aid paid to the beneficiaries of the scheme.
Following an action brought by FCB, the General Court of the European Union annulled the Commission’s decision on 26 February 2019, on the grounds that the Commission had not established to the requisite legal standard that an economic advantage had been conferred on the beneficiaries of the measure in question (see EUROPE 12202/24).
In its judgment of 4 March, the CJEU ruled that the General Court had committed “an error of law” when it deemed that the disputed decision should be assessed as a decision relating to both an aid scheme and individual aid. It also found that the Commission was right to criticise Spain for failing to notify it about the special tax regime enjoyed by the four clubs.
The judgment can be found at: https://bit.ly/3uSKbyS (Original version in French by Camille-Cerise Gessant)