Neymar Case Resurfaced: The Complete Story

Neymar Unveiled By Barcelona At Camp nou

A Madrid Judge (Jose de la Mata Amaya) has asked the top European clubs who showed interest in Neymar before his transfer to Madrid to provide copies of transfer offers for the Brazilian international before he joined FC Barcelona in 2013.

The request was made in response to a complaint by a Brazilian investment group DIS – Esportes y Organizacao de Eventos Ltda. which owned a 40 percent stake in Neymar’s transfer rights.

The trials over Neymar’s transfer will never end, will they?

For a clear understanding of why exactly the club is being investigated by the Spanish Tax Authority (STA), I attempted a summary of all the 13 contracts signed for this deal and how the prosecutor has interpreted these contracts.

The first contract signed on Nov. 15, 2011, FC Barcelona (represented by Sandro Rosell as president, and Josep Maria Bartomeu as vice-president), and Neymar Jr., N&N Consultoria Esportiva E Empresarial Ltda. (N&N, represented by Neymar Sr.), and Neymar Sr. as agent of the player.

Implication of this Contract

N&N who owned Neymar’s economic right agreed to pass the economic right of Neymar to Barcelona starting with the 2014-15 season.

FC Barcelona acquired the said right for 40m euro.

What is N&N? N&N is a company that was formally established on Nov. 18, 2011, three days after this first contract was signed. The administrators of this company were Neymar Jr.’s parents, each with a 50-percent- stake.

The second contract signed on Dec. 6, 2011 as a “loan contract” by which FC Barcelona gave N&N €10 million, a sum which would be repaid when Neymar Jr. signs for FC Barcelona in 2014.

The Prosecutor’s Interpretation: The prosecutor considers the 40m stipulated in the first contract a sign on bonus, not a payment made to the company to acquire his rights. It also sees the €10 million paid in December 2011 as a first installment of said sign on bonus. In 2011, Neymar Jr. wasn’t a Spanish resident, which means that FC Barcelona would have been under the obligation to pay the Non-Resident Income Tax (NRIT) associated with this payment to the STA. At the rate of 24 percent, this means €2.4 million. The prosecutor claims Rosell was the one who decided against paying the required sum to the tax authority.

In 2013, according to their statements, Rosell and Bartomeu, after a reunion with the first team’s coach at the time, decided to move up Neymar Jr.’s transfer by one year. They didn’t get the approval for this from the club’s board; Rosell was the one leading the negotiations. Moving up the transfer by one year meant that Neymar Jr. wasn’t yet a free agent and they had to acquire his federative rights from Santos FC. Also, in order to facilitate the player’s move one year earlier than what was agreed, he was offered additional money that hadn’t been stipulated in the 2011 contract.

Neymar Lifting the Champions League Trophy

Once the negotiations were concluded, Rosell and Bartomeu decided to publicly state that the cost of acquiring the player was €57.1 million (the €40 million agreed on in 2011 and €17.1 million paid to Santos FC for his federative rights). This decision was caused by the fact that on May 14, 2013, the Club’s Board had agreed to spend a maximum of €70 million on the transfers made in the summer of 2013.

The Prosecutor’s Interpretation: The prosecutor considers that the additional contracts signed by between FC Barcelona and Santos FC, and FC Barcelona and other companies, were designed to hide the real cost of the transfer and had no real purpose other than paying for the said transfer. By claiming that the cost of the operation was lower than it actually was.

IN 2013 FC Barcelona signed several contracts with Neymar Jr., Neymar Sr., and various companies that Neymar Sr. manages, the subjects of the contracts are summarized below:

June 3, 2013; Rossel and Bartomeu and N&N signed a contract to terminate the initial agreement signed in 2011.

June 3, 2013; FC Barcelona signed a contract to acknowledge the breach of the contract signed in 2011, hence, FC Barcelona are obligated to pay the €40 million penalty fee (which was to be paid in installments)

Prosecutor’s interpretation: The prosecutor considers these two contracts to be nothing else than the execution of the contract signed in 2011.

June 3, 2013, IMAGE Contract: the contract stipulates that a payment of €1.5 million will be made to this company for accepting the transfer of the player’s federative rights. FC Barcelona paid the STA 15 percent of this, meaning €225,000, as a royalty fee. The contract also stipulated that N&N would be paid a minimum of €900,000 per season for the player’s image rights.

June 3, 2013, Contract for representation and management: The subject of the contract is payment to the player’s agent (Neymar Sr.) for his services in the amount of 5 percent of sums paid to the player and the company that owns his image rights. For the year 2013, that would mean 5 percent of the following: The player’s bonus signing of €8.5 million, the €1.5 million bonus paid for the image rights, and the €2,549,700

The prosecutor’s interpretation: The prosecutor considers that these payments are in fact made to the player, not to his agent, because the agent doesn’t work for the club, he works for the player.

June 3, 2013: Contract for the observation and scouting of Santos FC and other players in Brazil. Payment for these services is in the amount of €400,000 per season, total of €2 million for five years. The payments are made whether or not N&N will get any players to sign for FC Barcelona in these five years.

June 3, 2013; Agency contract signed, the subject of the contract is finding marketing partners for the club and the player in Brazil. Payment for these services is in the amount of €800,000 per season, total of €4 million for five years.

In case the friendly organized by Santos FC isn’t played, an additional €4.5 million will be added to this amount. In case Neymar is a finalist for the Ballon D’Or in the five years of his contract with FC Barcelona, an additional €2 million will be added to this amount.

Prosecutor’s interpretation

The prosecutor considers that all these contracts are just a way of covering payments made to the player and that they have no real purpose other than that.

Neymar in the Champions league final

The taxes that the prosecutor considers were not paid to the STA are as follows:

1. Signing bonus installment paid in 2012 (€2.4 million)
2. Bonus stipulated in the image rights contract in 2013 (€146,250)
3. Agent fee paid in 2013 (€155,302.54)
4. Scouting fee paid in 2013 (€99,000)
5. Resident Income Tax (RIT) (€2.6 million)
6. Image rights paid in 2014 (€471,750)

As a result of this investigation, the prosecutor made the following accusations:

Sandro Rosell was accused of:

• Tax evasion corresponding to the year 2011.
• Tax evasion corresponding to the year 2013.
• Corporate crime.

Sandro Rosell was asked:

• For tax evasion corresponding to the year 2011, a period of three years and three months in prison and a fine of €4.8 million.
• For tax evasion corresponding to the year 2013, a period of three years and six months in prison and a fine of €20,358,157.62;
• For corporate crime, a period of nine months in prison.

Josep Maria Bartomeu was accused of:

•  Tax evasion corresponding to the year 2014.

Josep Maria Bartomeu was asked

• For tax evasion corresponding to the year 2014, a period of two years and three months in prison and a fine of €3,830,645.68

FC BARCELONA was accused of:

• Tax evasion corresponding to the year 2011.
• Tax evasion corresponding to the year 2013.
• Tax evasion corresponding to the year 2014.

FC BARCELONA was aked

• For tax evasion corresponding to the year 2011, a fine of €4,800,000.
• For tax evasion corresponding to the year 2013, a fine of €13,572,105.80.
• For tax evasion corresponding to the year 2014, a fine of €3.830,645.68.

In summary, the cost for the acquisition of Neymar Jr. was €83,371,000.

 (credit: Diana Kristine)