Soccer superstar Neymar’s long nightmare is over. And no, I’m not talking about the Copa America controversy.
Neymar’s team, FC Barcelona, has agreed to pay €9.3 million ($10.42 million US) in back taxes and a fine of €5.5 million ($6.16 million US) to Spanish tax authorities to settle a tax dispute involving the forward, according to Spanish news agency Efe. In total, the team is on the hook for €14.8 million ($16.58 million US) in back taxes and fines; the club has reportedly already paid €13.5 million ($15.12 million US) in good faith.
Most involved in the matter believe that it’s a good result: the prosecutor was seeking a fine of €22.2 million ($24.64 million US). Most, however, does not include former Barcelona president Joan Laporta. Laporta is opposed to the deal reached with authorities, saying that it isn’t good for the club’s image and instead is merely instrumental in “saving the behinds” of current leaders.
Neymar da Silva Santos Júnior (known simply as Neymar), a native of Brazil, made his professional sports debut on March 7, 2009, at the age of 17. He quickly became a star with über footballer (and fellow Brazilian) Pelé calling him “an excellent player.”
In 2013, Neymar announced that he would be moving to FC Barcelona. That contract, together with a winning team, helped Neymar climb the ranks of the soccer elite: in 2016, Neymar was ranked #21 on Forbes’ list of the World’s Highest Paid Athletes racking up $14.5 million in salary and $23 million in endorsements.
Santos, Neymar’s original club in Brazil, alleges that negotiations for Neymar began in 2011. Payments related to that signing were reportedly made to a Brazilian company controlled by Neymar’s father. Spanish prosecutors alleged the payments were disguised in order to avoid reporting and tax requirements. Payments were also made to Neymar’s former club (Santos).
Santos, angry that it might have been cheated, filed court papers to find out more details of the 2011 transaction. At the time, Neymar and his father denied any wrongdoing, suggesting that any resulting tax consequences of the sale would be addressed in Brazil. That’s exactly what happened.
In Brazil, Judge Carlos Muta charged Neymar with “omitting sources of income from abroad” from 2011 and 2013: FC Barcelona was identified as the source of that income. Judge Muta put a freeze on certain of Neymar’s assets as a protective measure. In March 2016, a Brazilian administrative court found Neymar guilty of tax fraud and ordered him to pay 188.8 million Brazilian reals ($51.74 million US) in penalties, interest, and back taxes.
Meanwhile, back in Barcelona, a Spanish Court found that there was enough evidence to go to trial over the Santos to Barcelona transfer. While Neymar and his father were not charged in Spain, Neymar’s club, FC Barcelona, was ordered to trial on tax fraud charges together with club president Josep Bartomeu, and former club president Alexandre “Sandro” Rosell. As part of the settlement, the club has been cleared, as well as Bartomeu and Rosell.
The club confirmed in a statement that its board had approved the deal. The statement read:
The Board of Directors, which convened for an ordinary session at the Club’s offices on Monday, has decided to approve the agreement presented by the Club’s Legal Services with regard to the case surrounding the signing of Neymar Jr, currently being heard in the Courts of the Province of Barcelona.
The agreement involves the recognition by the Club of an error in tax planning for the signing of the player, for the fiscal years 2011 and 2013, when they did not not correctly withhold payments resulting from his incorporation. In addition, the Club has been exonerated from responsibility for the fiscal year 2014, which was also part of the proceedings.
The Board considers the approval of this agreement to be a positive step, one that puts an end to a situation of legal uncertainty that could have affected the viability of the Club’s sporting and economic plan in the coming years.
Given the importance of this decision, the Board has decided to subject the motion to approval at the next General Assembly of Member Delegates.
It’s not the only tax worry for Barcelona. Neymar’s teammate, Lionel Messi, was in a Spanish court last week to face tax evasion charges of his own. And in January of 2016, another Barcelona player, Javier Mascherano, pleaded guilty to two counts of tax fraud, drawing a fine and jail time (he’ll likely avoid the jail time). The charges were not unexpected: in 2014, a partner at a high-profile law firm in Spain advised that “Right now, four top players at Barça are being investigated,” citing Iniesta, Piqué, and Mascherano as three of the affected players.
FC Barcelona is estimated to be worth $3.5 billion. Forbes ranks the team at #2 on its list of the World’s Most Valuable Soccer Teams – just behind La Liga rival Real Madrid. Curiously, no Real Madrid players have been publicly called out on tax charges.