One of the focuses of the Public Treasury’s review of sports entities in recent times has been the review of the contractual relationships of athletes’ agents with the clubs.
The Tax Administration considered that athletes’ agents did not really provide their services in favor of sports clubs but exclusively in favor of the represented athletes.
Under this premise, the Administration regularized numerous clubs and agents using the qualification principle of article 13 LGT, considering that the remuneration received by the agents should really be classified as remuneration received by the athletes since they should be considered as services whose exclusive beneficiaries were the athletes.
After successive instances of review, the Supreme Court issued rulings in which it systematically considered that the regularization that the Tax Administration intended to carry out could not be carried out under the principle of qualification since the aforementioned mechanism of integration of the tax norm did not cover such a transformation of the existing contractual relationship between club, agent and athlete.
The Tax Administration reclassified the payments made by the clubs to agents on the occasion of the signing or renewal of contracts between the former and the athletes as income from the work of the athletes because: (i) they would not be “agents” in the proper sense of the word, but of mediators; This is because the mediator’s fees are conditional on the conclusion of the contract (mediation or brokerage contract), and are not accrued in any case and without responding to the successful completion of the operation (as occurs in the agency contract); and (ii) if the mediators were “agents” in the proper sense, payment by the worker would be prohibited.
The Supreme Court has already pointed out (see SSTS of 23-2-2023 (rec. cas. 5915/2021, ECLI:ES:TS:2023:610; 5730/2021, ECLI:ES:TS:2023:616) and 06-22-2023 (rec. cas. 4702/2021, ECLI:ES:TS:2023:2804) that article 13 LGT can only be used when there is a tax avoidance scheme that, relying on a nominalism that does not correspond to reality, the Tax Administration subsequently mutated the way in which the taxes are applied. The same legal relationships were subject to regularization using article 16 LGT (simulation) instead of the principle of qualification.
The recent ruling of the Supreme Court of October 28, 2024 (ECLI:ES:TS:2024:5855) addresses a case in which the Administration regularized the same factual situation that the High Court had previously faced, but regularized under the qualification principle.
The Court reproaches the Administration for having, in the face of facts substantially identical to those that the Administration had previously reviewed, chosen to apply a much more burdensome alternative, since simulation entails an aggravated sanctioning regime.
The ruling concludes that the Tax Administration has not proven the alleged simulation because it assumes that every legal relationship between the club and the agent belongs to the category of representation work, and not to another possible and different legal relationship, even if it has been recorded in the contracts. The Administration adopted the intended final result and then reconstructed the analysis of the contracts backwards to justify that conclusion.
The Court affirms that the indications that led to the classification of the contracts as simulated are equivocal and inconclusive in the case of an interested construction of the Administration, since the concurrent facts in the case prosecuted as simulatory were the same as all the other precedents that had been given rise to unfavorable responses for the Administration by having used the qualification principle.
In short, it is concluded that if the qualification power of article 13 LGT does not authorize the Administration to change the legal relationships to determine more onerous tax effects for the taxpayer, it will even less be possible that in the same circumstances a simulated contract, since the power contained in article 16 LGT arises from a highly qualified qualification or requalification, to the point of considering that a specific business does not exist.
Although the Court has not established doctrine through this last ruling, considering that we are facing a situation that must be examined case by case, it is significant that the Court has flatly rejected the simulatory thesis that the Administration had adopted after the rejection of its first regularizations.
The services provided by agents are usually dual since, although in the most high-profile cases they are directly associated with an athlete and it is perceived that when a club is interested in a contract the agent acts as a mere representative of the athlete, the truth is that In most hirings, clubs have their ‘trusted’ agents with whom they contact in order to find possible candidates for vacant positions in the squad. That is, its role is no different from that of any recruitment or labor mediation company in other sectors.
The role of sports agents is not very different from any other labor market mediator. Its function is to facilitate the hiring of workers – athletes – by companies – sports clubs – and, if necessary, participate in contractual negotiation by advising and intermediating. In the labor market, the cost of these intermediaries is exclusively attributable to employers by legal mandate, so their exclusive attribution to the worker in the sports labor market is not consistent with the reality of the majority of hiring.
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