The Supreme Court has upheld the appeal of Gerard piqu against the ruling of the National Court in the two aspects for which the recurring footballer formulated his demand: the contributions to the English Social Security and the business network that managed his image rights.
The contentious-administrative appeal brought before the National Court had as its object the resolution of the Central Economic-Administrative Court (TEAC), which, only partially, had upheld the claim made by the footballer against the tax settlement agreement issued by the Regional Inspection Unit of the Special Delegation of Catalonia, for the Personal Income Tax (for the years 2008, 2009 and 2010), as well as against the sanctions imposed, two fines of 1,457,855.61 euros and 678,012.59 euros , respectively. In total, just over 2.1 million euros.
The Second Section of the Third Chamber of the Supreme Court, made up of the magistrates Rafael Fernndez Valverde (President), Jos Antonio Montero (speaker), Jos Navarro, Dimitry Berberoff and Isaac Merino, agrees with Piqu and annuls the sanction that was imposed on him.
The first question raised consists in determining whether the contributions paid to Social Security -or social security management entities- in another State of the European Union, when they are mandatory for workers, can be considered as a deductible expense from income from the I work in the Personal Income Tax. Such contributions had been paid by the footballer during the provision of labor services for the English soccer team Manchester United, being deducted by the club from the footballer’s monthly payroll to cover the National Insurance, a system equivalent to our Social Security, indicating the Supreme Court “that it should be understood that we are, like the Social Security contributions, before legally imposed coercive obligations as a result of the development of employed work”.
Specifically, it is recalled by the Supreme Court that “it is inherent to the essence of the tribute … that all those expenses necessary for obtaining the performance are deducted, and among them it is evident that those that are imposed must be considered, such as contributions to Social Security, without distinction, as is done by the same law, so that obtained the returns subject to the tax, it is necessary to deduct said expenses, among which are these coercive and mandatory contributions that are derived by the provision of paid work carried out in the United Kingdom, when, and it is not disputed, according to the regulations of the country you must compulsorily contribute when providing work for others “.
In this sense, the Supreme Court establishes the following doctrine: “Contributions paid to Social Security -or social insurance management entities- in another State of the European Union, when they are mandatory for workers, must be considered as an expense deductible from work income in Personal Income Tax “.
On the other hand, the second question raised, in relation to the same Personal Income Tax, was determined by the specific circumstances of the appeal, and consists of determining whether the returns obtained directly – that is, without intermediation of a company- by whom they assign their image rights to third parties and that bring causes other than the mere passive use of such rights, insofar as they involve the development of additional activities of a personal nature by the transferor of said image rights, Income from movable capital or from economic activities must be considered.
The National Court had opted to consider said income as income from movable capital, rejecting that the plaintiff’s claim to qualify them as income from economic activities can be accepted, considering the contract concluded between the footballer and the entity that exploited the rights to be void. The Supreme Court, which had already ruled on this issue in relation to other footballers, insists that the common denominator of it “is its casuism, since legally it does not seem that the distinction has any difficulty, however each case and its concurrent particular circumstances which lead to one or another qualification “.
The Supreme Court reproaches the National Court that it would basically limit itself “to incorporating the conclusion it reaches, that is, that there is no order by the appellant of personal and material means, but it dispenses with more detail.”
On the contrary, the High Court considers that “the truth is that it is established that in the business network that revolves around the entity Kerad Projet, with interests in various sectors, and in which the appellant has a majority stake of 70 percent. One hundred, expressly one of the minority partners, the brother, had been assigned the management of the image rights of the appellant, that is, there is a person designated for the organization and management of this activity, apart from the appellant himself; being very significant that the examination carried out by the Inspection from the years 2011 to 2014, and which leads him to conclude that we are facing returns from economic activities by far exceeding what is the mere exercise of the right to image, is carried out on similar contracts and with respect to almost the same contractors, so that it is possible to identify very similar contractual contents; contents, which, as has been said, served the Inspection to consider that the returns come from an economic activity; It is the appellant itself that illustrates this content in the contracts referring to the years in question, without any opposition from the respondent, the following contractual obligations imposed in the contracts for the assignment of image rights are sufficient as examples. . “.
The judgment of the Supreme Court outlines the contracts signed by such entity, with different advertising content, and concludes by stating that therein are agreed “contractual obligations that exceed what is the mere exercise and exploitation of image rights, constituting an activity that requires the organization of personal resources, let us remember that a person was in charge of the organization to exploit these rights, and materials, since an activity that transcends the mere use and exploitation of the appellant’s image by third parties is required in the various contracts ” .
The estimation of the contentious-administrative appeal entails the nullity of the settlement paid to the footballer, as well as the sanction imposed.
Reference from elmundo