Cuatrecasas secures tax victory for Louis van Gaal
Cuatrecasas has successfully represented former football manager Louis van Gaal in proceedings before Spain’s National Court (Audiencia Nacional), which has ruled in his favour in a long-running dispute with the Spanish Tax Administration concerning the tax treatment of compensation received following the termination of his contract with FC Barcelona in 2003.
The case centred on the taxation of the severance payment received by Van Gaal after leaving the Catalan club. At the time, FC Barcelona applied and paid a tax withholding exceeding €2m on the compensation.
With the support of Cuatrecasas, Van Gaal challenged the tax treatment of the payment and sought the reimbursement of a significant portion of the withholding. The former coach argued that the compensation qualified for the 40% tax reduction then applicable to irregular employment income under Spanish tax rules.
Following years of litigation, the National Court upheld Van Gaal’s position and ruled in favour of his claims. The judgment orders the Tax Administration to bear the legal costs of the proceedings and recognises the former manager’s right to recover part of the withholding tax paid on the compensation.
Once the ruling becomes final and is enforced, the Spanish Tax Administration will be required to refund the amounts unduly collected, together with the corresponding late-payment interest. Given the time elapsed since the original payment, the accrued interest could reportedly amount to a figure close to the principal itself.
The team
The matter was led by Jaume Bonet and Daniel Cuyás, members of Cuatrecasas’ tax Litigation practice, who acted on behalf of Van Gaal throughout the proceedings.
