Rafael Nadal at a reception for the Davis Cup winners in Moncloa last Tuesday. Photo by Luis Sevillano.
Housing Investigates Rafael Nadal and Obliges Him to Change His Fiscal Residence
His companies paid taxes in the Basque Country though they weren’t active there
El País: Hacienda investiga a Rafael Nadal y le obliga a cambiar de domicilio fiscal
José María Irujo reporting from Madrid February 19, 2012
The match has been very long, more than two years long, and has been played inside offices and without spectators, but in the end the victory quietly went to the Tax Agency. Tennis player Rafael Nadal’s companies, which moved €56 million between 2005 and 2011, solicited a change of fiscal residence from the Basque Country to Manacor, Baleares last December 23.
Rafael Nadal’s business framework had taken advantage of fiscal residence in San Sebastián, Gipuzkoa the last six years to benefit from the region’s special tax regime though neither the companies’ activities nor their management were based in the city, according to a Tax Agency source. Last December, tax inspectors and the sportsman’s fiscal assessor came to an agreement that Nadal would request a change of residence and refill Form 036, which is obligatory to complete the transfer.
The agreement also requires the sportsman to regularize his tax situation by paying the millions of euros in taxes that he had avoided, according to agency sources. The sportsman’s spokesman declined to give an exact figure and admitted that the companies have moved their residence to the Balearic Islands and “as a result of this move would not receiving the benefits foreseen under the previous tax regime.” Nadal has always maintained his personal fiscal residence in the Balearic Islands, his birthplace.
The investigation into Nadal’s companies’ fiscal residence is part of a Tax Agency program that for five years has sniffed around the hundreds of companies legally based in the Basque Country and Navarre that feign the development of management and activities there to benefit from their tax systems and which on occasion are practically nonexistent. Nadal’s companies had this profile, assure sources close to the investigation.
“The law is very clear: a company’s residence should be where its activity and management are developed. Rafael Nadal is a great sportsman and wins his money honestly, but he only went to San Sebastián to eat steaks. He was poorly advised. His companies never should have been based there,” asserted a Tax Agency source.
Nadal’s companies were established in Gipuzkoa in 2005 and 2006 and were listed as Entrepreneurial Promotion Companies (SPE). The SPE is a tax instrument created by the Basque Nationalist government for companies basd in Álava, Bizcaia, and Gipuzkoa, and it was revoked in the rest of Spain. Article 60 of the regional law establishes that SPEs are societies dedicated to entrepreneurial activities whose securities are not listed on the stock exchange. They demand a minimum business capital of three million euros and can last five years. The Gipuzkoa Housing Agency decides which companies correspond with this listing.
The taxes for these societies are minimal, on occasion less than 1%, and this has provoked an inflow of businesses which saw the Basque Country as a kind of off-shore territory or fiscal paradise. In 2010, an investigatory commission of General Assemblies recommended the SPE’s elimination, and now the Bildu government is questioning it. “It’s not an instrument that the current government likes, and we are studying what to do with it, but we will not give any more details,” responded the Gipuzkoa Housing Agency’s spokesman.
It’s estimated that some 100 companies have this fiscal privilege in Gipuzkoa. Nadal’s were in this group, various sources stated. The tennis player has not provided details about his companies, but three (Debamina, SL, Goramendi Siglo XXI, and Aspemir, SL) have business capital that is practically identical to what the Basque law requires for listing as an SPE. The businesses’ official objectives are the fomenting, promotion, and participation of companies, nearly the word-for-word legal definition of these privileged entrepreneurial promotion societies.
Debamina, SL, is the head of the group. Its primary fiscal residence was Avenida del Barcelona #4 in San Sebastián, and its only administrator was Sebastián Nadal, the player’s father. The sportsman owns 99.35% of the capital. Debamina, SL holds 100% of Aspemir, SL, which is a limited unipersonal company [it has only one stockholder] and which controls Goramendi Siglo XXI.
According to the latest calculations declared by the Commercial Registry, the total active value of Aspemir has risen to €56 million euros; this year, its total profits rose to €19,808,112, for which it has paid €10,319 in taxes. From the analysis of these figures, we can deduce that for years, and through compensation methods, the companies paid very low percentages of taxes, lower even than 1%. The Housing Department’s state corporate tax is 30%. “It’s a private subject. We’re not going to say how much we paid,” responded Nadal’s spokesman.
During their stay in the Basque Country, Nadal’s companies’ management councils included José Antonio Lopetegui Agote, a Gipuzkoan developer and the brother of Miriam Lopetegui and former Barcelona and Spain goalkeeper Julen Lopetegui. The Lopeteguis have had a long friendship with the Nadals.
Nadal’s case is similar to manufacturer José Luis Moreno’s. Tax Agency inspectors confirmed in 2008 that Miramón Mendi, SA, his principal company and the top television producer in Spain, didn’t develop any of its activities in the Basque Country. The investigation took two years and started with a visit to Paseo de Andoain #18 in San Sebastián, which figured as the company residence in which he stayed 13 years. Moreno attended to the agency’s request, regularized his payments, and moved the companies’ fiscal residence to Madrid. Now, the same agency has touched Nadal.
Another Entrepreneurial Promotion Company (SPE) on the point of explosion is the fraudulent Catalonian firm Glass Costa Este Salou, whose shareholders include ex-Housing Director and ex-PNV Senator Víctor Bravo. Through this tax instrument, the company established its fiscal residence in San Sebastián though neither its activities nor its management were in the community. In 2010, an investigatory commission of General Assemblies unanimously called for the disappearance of SPEs and produced a report which concluded that this special regimen lacked transparency, facilitated debt, and opened the door to companies seeking fiscal paradises. Alava and Vizcaya, controlled by the PNV, blocked SPEs’ abolition.
Gorka Maneiro, age 36, UPyD parliamentarian and fiscal assessor, assured that the instrument has had a “long leash” that it’s “brought a lot of money to the state while deceiving the citizens. SPEs practically don’t pay taxes, and they don’t complete their objectives of stimulating business creation, either. We must abolish this special regime.”
The Lehendakari (First Minister of the Basque Government), Patxi López, stated he is in favor of revising the bonuses written into in the regional councils’ tax rules in order to bring about “just fiscal pressure”. In 2010, the incentives conceded to Guipúzcoa’s 115 SPEs cost the regional Housing Department €600 million.