The Tax Administration (AT) demands that Fernando Santos, national football coach, pay more than 4.5 million euros to the IRS. The news advanced by Expresso explains that the contracts between the coach and the Portuguese Football Federation (FPF) are at stake, namely the 2016 and 2017 financial years, years in which the coach received almost 10 million euros of the Federation, after declaring and paying the IRS. on an annual salary of 70 thousand euros.
According to the tax authorities, the way the manager received and declared the income, through a sole proprietorship, was artificial and was mainly aimed at reducing taxes.
A few months before being presented as the new national coach, Fernando Santos created a company, Femacosa, of which he became managing partner. Thus, the coach did not sign an individual employment contract, but the Federation hired this company to provide services, both to the coach and to his assistants.
The two years in question correspond to Portugal’s victory in the European Championship, which earned the said company a turnover of around 10 million euros. According to Expresso, 2.5 million euros were donated to other companies, created by the deputies.
The coach’s salary was paid to him by Femacosa, as managing partner, and will have been 5 K€ per month (70 K€ per year).
For the tax administration, Femacosa has no real substance, and was created to reduce the tax burden of its main partner in this case, Fernando Santos. If the coach had received a contract through an Individual Employment Agreement, he would be placed in the top income bracket of the IRS, paying a higher amount of tax. It is on the basis of this work that the tax authorities made use of the general anti-abuse clause, fiscally disqualified the company, and claimed from the coach an additional 4.5 million euros in IRS and interest, reveals Espresso.
Femacosa was founded on January 14, 2014. It is a consulting company in the areas of trade, imports, civil construction, among other activities.
The team’s Euro 2016 campaign went well and the FPF renewed the contract for four years. With this renewal, Femacosa was entitled to a subscription premium of €750,000.
Over the years, the company has retained and accumulated profits, without distributing dividends, reaching the end of 2020 (latest data available) with equity of 17.6 million euros.
In 2018, new actors are appearing at Femacosa. The sons, sons-in-law and daughter-in-law of Fernando Santos become minority partners, while the national coach retains part of the quotas.
In a joint statement, the Portuguese Football Federation (FPF) and Fernando Santos condemned what they called a “gross and manifestly truncated violation of the right to tax secrecy”, the statement said. “Fernando Santos not only does not owe a penny to the tax authorities, but he has continued to have his situation regularized under the law,” adds the FPF.
Fernando Santos appealed to the arbitration tribunal, represented by Morais Leitão, who has accompanied him since at least 2014.