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EU orders Spain to recover state aid paid to Real Madrid

The Commissioner for Competition’s ruling hands Spanish government four months to recover 18.4 million euros paid to Real by Madrid City Hall
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The land in Las Tablas at the centre of the ruling.
Jesús RubioDiario AS

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The European Union has delivered its resolution against Real Madrid for receiving state aid to the Spanish authorities and has ordered the government to recover the 18.4 million euros plus accrued interest received by the club by Madrid City Hall when Popular Party mayor Alberto Ruíz-Gallardón was in power.

"Illegal state aid"

According to the judgment, to which this newspaper has had access: “The European Commission considers that Spain has illegally granted state aid to Real Madrid in contravention of Article 108, Paragraph 3, of the Maastricht Treaty.”

The EU’s resolution, signed off by European Commissioner for Competition Margrethe Vestager, fixes the timeframe under which Spain must meet the requirements of the ruling. The document provides two months “for the Kindgom of Spain to present before the EU the total amount (capital plus interest), which is to be recovered from the beneficiary (Real Madrid), a detailed description of the measures adopted to ensure compliance with the terms of the resolution and the documents that demonstrate that it has ordered Real Madrid to reimburse the state aid."

Land swap deal

The 31-page ruling lays out the process by which the EU considers that Real Madrid received state aid, which relates to a 1998 deal between Real Madrid and the city authorities over land in the Las Tablas area of Madrid that the EU has ruled was illegal.

The parcel in question was originally given to the club in a land exchange deal, however when Real discovered they couldn't use it they were given excessive compensation from the Madrid City Council, according to the EU.

In the ruling (which can be consulted in Spanish on AS.com), the legal basis for the decision is fully set out, along with observations by the Spanish state, Real Madrid’s arguments and the final resolution with its legal reasoning and the consequences of the decision.

Valencia, Hércules, Elche

Other Liga clubs that have been the beneficiaries of state aid or irregular tax breaks will also have to pay back in full the amounts received. This applies to the collateral guarantees provided by the Valencia regional government against several loans provided by regional savings banks to Valencia (86 million euros), Hércules (18 million) and Elche (14 million).

Real Madrid, Barcelona, Osasuna, Athletic

Brussels is also to look into the business models Real Madrid, Barcelona, Athletic Bilbao and Osasuna are allowed to use, being foundations rather than companies, that permit them to make savings on their tax payments in relation to the remainder of clubs which are taxed as public limited companies.