Ancelotti denies tax fraud, faults Real Madrid’s payment system

Real Madrid's head coach, Carlo Ancelotti, testified in court, asserting that he did not deliberately engage in tax fraud as his trial commenced regarding allegations of failing to report income to Spain's tax authorities.

This case is part of a broader trend targeting sports personalities in the nation.

Prosecutors are pursuing a prison sentence of four years and nine months for the 65-year-old Italian, claiming he neglected to pay over one million euros ($1.1 million) due to unreported earnings from image rights during 2014 and 2015, coinciding with his initial tenure at the club.

They contend that Ancelotti only declared his salary from the club while excluding income derived from his image rights in his tax filings for that period.

The prosecution alleges that he established a “confusing” and “complex” network of shell companies to conceal additional earnings from his image rights and other ventures, including real estate.

In his testimony at the High Court of Justice in Madrid, Ancelotti stated that the payment structure was suggested to him by Real Madrid, asserting that “all the players do it,” as did former coach Jose Mourinho.

“When the club proposed it, I connected Real Madrid with my advisor. I did not handle it personally, as I had never been compensated in that manner,” he explained.

“I never realized anything was amiss,” he continued, emphasizing that he “never contemplated committing fraud.”

Ancelotti appeared in court accompanied by his wife, Mariann Barrena, and his son, Davide, who is the assistant manager at Real Madrid.

The trial is anticipated to last two days, with the possibility of an out-of-court settlement at any stage.

Previous similar cases involving footballers have often resulted in suspended sentences, typically through out-of-court agreements.

Ancelotti informed the court that he was unaware that the company he established to manage these rights enabled him to reduce his tax obligations.

“At that time, it was common practice among players and coaches; it seemed appropriate,” he remarked.

– Spanish crackdown –

Spain has intensified its enforcement against prominent football players who have failed to fulfill their tax obligations in recent years.

In 2019, Mourinho received a one-year suspended sentence after pleading guilty to tax fraud.

Both Lionel Messi and Cristiano Ronaldo were convicted of tax evasion, resulting in prison sentences that were suspended due to their status as first-time offenders.

In 2023, Colombian pop star Shakira agreed to a three-year suspended sentence and a fine of 7.3 million euros to resolve a tax fraud case and avoid going to trial.

Prosecutors accused the "Hips Don’t Lie" singer of defrauding the Spanish government of 14.5 million euros on income earned between 2012 and 2014, allegations that Shakira denied, asserting that she only relocated to Spain full-time in 2015 while in a relationship with Barcelona defender Gerard Pique.

Ancelotti began his tenure at Real Madrid in 2013 and departed in May 2015, subsequently taking the helm at Bayern Munich the following year.

The former Italy international midfielder, who won the European Cup twice with AC Milan during his playing career, later managed Napoli and Everton before returning to Real Madrid in 2021.

In addition to his Champions League achievements, he has secured domestic league titles with Madrid and Milan, as well as in England with Chelsea, in Germany with Bayern Munich, and in France with Paris Saint-Germain.