Real Madrid head coach Carlo Ancelotti Real Madrid head coach Carlo Ancelotti has been charged with tax fraud. Photo: Lluis Gene/AFP
Image: Lluis Gene/AFP
Real Madrid coach Carlo Ancelotti denied having intentionally committed tax fraud on the opening day Wednesday of his trial for allegedly failing to declare income to Spain's tax office, the latest in a string of such cases targeting sports figures in the country.
Prosecutors are seeking a jail term of four years and nine months for the 65-year-old Italian, accusing him of failing to pay more than one million euros ($1.1 million) due to undeclared earnings from image rights in 2014 and 2015 during his first spell at the club.
They argue Ancelotti — who as a coach has won a record five Champions League trophies including three with Real Madrid — had only reported the salary he was paid by the club and omitted income from his image rights in his tax returns during this period.
Prosecutors allege he set up a "confusing" and "complex" system of shell companies to hide his extra earnings during this time from his image rights and other sources such as real estate.
Ancelotti told the High Court of Justice in Madrid that on the advice of the club, a firm was set up so he could collect 15 percent of his annual salary of six million euros in image rights.
He never realised that this allowed him to pay less tax, Ancelotti added.
"I never realised that something wasn't right" until 2018 when the public prosecutor's office opened a probe into his finances, the Real Madrid coach said, saying he "never considered committing fraud".
"At that time, all the players and coaches were doing it that way, it seemed like the right thing to do," he said, adding former Real coach Jose Mourinho had a similar arrangement.
"When the club suggests it to me, I put Real Madrid in touch with my advisor. I didn't deal with it because I had never been paid that way."
Ancelotti's son Davide, who serves as assistant manager at Real Madrid, and his wife, Mariann Barrena, also took the stand at the trial, while his step-daughter Chloe McClay answered questions via a video link from Los Angeles.
The Real coach said he felt "good" and was "at ease" as he left the courthouse at the end of the first day of the trial.
The trial continues on Thursday. The parties could reach an out-of-court agreement at any point in the process.
Previous cases involving footballers have resulted in suspended sentences, often via an out-of-court settlement.
Spain has cracked down in recent years on football stars who have not paid their due.
Mourinho received a one-year suspended sentence after reaching a guilty plea for tax fraud in 2019.
Lionel Messi and Cristiano Ronaldo were both found guilty of tax evasion and received prison sentences that were waived for being first-time offenders.
Colombian superstar artist Shakira in 2023 agreed a three-year suspended sentence and paid 7.3 million euros in fines to settle a tax fraud case and avoid trial.
Prosecutors had accused the "Hips Don't Lie" singer of defrauding the Spanish state of 14.5 million euros on income earned between 2012 and 2014, charges Shakira had denied, saying she only moved to Spain full-time in 2015.
She was in a relationship at the time with Barcelona defender Gerard Pique.
Ancelotti took over at Real Madrid in 2013, leaving in May 2015, before being appointed by Bayern Munich the following year.
The former Italy international midfielder, who as a player won the European Cup twice with AC Milan, later managed Napoli and Everton before returning to Real Madrid in 2021.
Aside from his success in the Champions League, he has won domestic league titles with Madrid and Milan, in England with Chelsea, in Germany with Bayern Munich and in France with Paris Saint-Germain.
AFP