He agrees with the footballer that expenses for Social Security or other European social insurances are deductible when they are mandatory for workers
It also establishes that the direct returns of the person transferring image rights are considered movable capital or economic activities, as the case may be.
The Supreme Court has agreed with the footballer Gerard Piqué and has canceled the fines for 1,457,855 and 678,012 euros imposed by the National Court when ratifying those established by the Central Economic-Administrative Court (TEAC) when it reviewed the tax settlement agreement issued by the Regional Inspection Unit of the Special Delegation of Catalonia, for the Tax on the Income of Individuals for the years 2008, 2009 and 2010, as well as against other imposed sanctions.
The Supreme Court accepts the allegations of the footballer in two tributary aspects, which will mark the way for other athletes who are in the same situation. The first of them has been to determine, as requested by Piqué, that paid contributions to Social Security or social security management entities in another State of the European Union, when they are mandatory for workers, they can be considered as deductible expense from earned income in the Personal Income Tax.
The second question raised, also in relation to the Personal Income Tax, consisted of determining if the returns obtained directly, without the intermediation of a society, by whom they assign their image rights to third parties and that involve the development of additional activities of a personal nature by the person who assigns those rights, not returns from movable capital or economic activities should be considered automatically, but they must study the circumstances of each case.
Regarding the first question, the Supreme Court recalls that when Piqué provided labor services for the English team United manchester, the club withdrew from its monthly payrolls certain amounts to meet the National Insurance, a system equivalent to our Social Security. The Supreme Court affirms that, as with Social Security contributions, “it must be understood that we are facing legally imposed coercive obligations as a consequence of the development of employed work.”
The sentence says that “it turns out connatural to the essence of the tribute that all those “own” expenses to obtain the performance are deducted “. Among them are evident, he continues, those that are “obligatorily imposed, such as Social Security contributions, 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 from 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 employed”.
The Supreme Court explains that the National Court had opted for consider the income from the transfer of rights as income from movable capital and reject that they can be classified as income from economic activities, as the contract entered into between the footballer and the entity that exploited the rights is considered void. However, the Third Chamber, as it had already ruled in relation to other footballers, insists that each case and its circumstances must be considered.
It explains that the Hearing had been limited to say that there was no “an ordering by the appellant of personal and material means” without further detail, but the Supreme Court declares 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 “, in which Piqué has 70%, his brother is assigned the management of his image rights. It also considers significant that in “the examination carried out by the Inspection from the years 2011 to 2014” leads it to conclude that it was “income from economic activities for far exceeding what is the mere exercise of the right to image” and because “it is carried out on similar contracts and with respect to almost the same contractors”,
For the Supreme Court they are “contractual obligations that exceed what is the mere exercise and exploitation of image rights”, which makes it an activity that specifies the organization of personal resources, as Piqué’s brother does when taking 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 “.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.