Spain offered a favorable tax framework around the 2019 Champions League final held at the Wanda Metropolitano, supporting what authorities described as a timely and decisive administrative action. The arrangement allowed UEFA to benefit from tax exemptions for revenue linked to the event, aligning with a royal decree processed in late 2018 that aimed to clarify the tax treatment of activities connected to major football competitions in the country.
A court document later surfaced through a report by TEAC, reported by El Periódico de España, indicating that the Treasury appeared to withhold a portion of funds related to the event’s broadcasting rights and related benefits. The document suggested an obligation to reimburse a sum, plus interest, tied to the financial arrangements surrounding the broadcast of the final in Spain. The issue highlighted tensions between the ongoing negotiations for hosting the final and the precise application of tax rules to the event’s profits.
The location of the 2018/19 Champions League final, the Wanda Metropolitano, was confirmed in September 2017 during Mariano Rajoy’s tenure as prime minister. Months later, with Pedro Sánchez leading the government, a Royal Decree was issued to specify the tax framework, including exemptions that would apply to UEFA for the event. The decree was described as urgent and extraordinary, reflecting a policy choice intended to ensure Spain’s capacity to host large-scale sporting events in a tax-friendly environment.
Javier Antón, who spoke on behalf of the PSOE on sports issues at the time, later explained that the decision reflected ongoing negotiations carried over from the previous government. The aim, he said, was to secure the profitability and impact of hosting such events. Calculations at that moment anticipated substantial economic returns for Spain, with Madrid expected to reap a large portion of the fiscal benefits linked to the final and related activities.
This approach was part of a broader pattern in which the government sought to foster major sporting events through favorable tax regimes. For example, in December 2022 there were similar considerations around a major tournament, with provisions designed to exempt a portion of income earned during the event period from corporate tax due to its direct connection with participation in the competition.
Legal certainty for UEFA
The 2018 royal decree, published in the Official State Gazette, stressed the need for clear, forward-looking rules around where events would be staged and how the tax framework would apply. The mechanism included tax exemptions for participating teams in the event and aimed to provide a stable, predictable environment for organizing future UEFA events in Spain.
In practical terms, this meant that Spanish tax authorities would not levy income tax on non-resident players for work performed within Spain, would not withhold bonuses related to participation, and would not tax individual awards such as best player recognitions awarded during the match. The policy thus helped ensure that the financial rewards from the event would be retained within Spain’s economy without the friction of additional local taxation on non-residents connected to the competition.
How the decree was processed?
The government then led by Pedro Sánchez justified establishing a distinct tax regime by citing commitments to host UEFA sporting events within Spain. The decree clarified that regulations were needed to guarantee that major tournaments would occur under a predictable tax framework, aligning with prior agreements reached with UEFA and supported by the new administration. The decree did not go through a formal congressional vote before its urgent approval, though later parliamentary action reflected cross-party support from PSOE, Unidas Podemos, and ERC.
Critics at the time noted that the decree mixed broader social measures with provisions directly affecting the taxation of event-related income. Some argued that the measure was complex, intertwining tax exemptions for maternity and paternity leave with other items tied to UEFA and the organization of large tournaments. Nevertheless, the publication and subsequent parliamentary approvals underscored the government’s intent to facilitate Spain’s continued role as a host country for major football events while maintaining a stable tax regime for those events.