Neymar and Barcelona FC charged with tax evasion in Brazil

The Federal Public Prosecutor's Office in Santos, São Paulo, has indicted Brazil's football star Neymar Júnior, his father, and two executives of Spain's Barcelona football club, Alexandre Feliu and Josep Maria Bartomeu Floresta. They are charged with forging documents between 2006 and 2013 for the purpose of avoiding taxes owed to Brazil's Federal Revenue Service. The charges were filed with a federal court on January 27.

The illegal activities were found to have involved three businesses linked to the footballer's family: Neymar Sport e Marketing, N&N Consultoria Esportiva e Empresarial, and N&N Administração de Bens, Participações e Investimentos. The companies' capital and operating capacity were not consistent with their financial transactions, according to the prosecutors.

The charges involve fraud in contracts related to the use of Neymar's image rights while he was a player at Santos football club from 2006, and during his transfer to Barcelona FC, with negotiations taking place from 2011.

According to prosecutors, the violations have caused million-scale losses to the government. In September 2015, the Federal Regional Appellate Court froze $47.30 million in assets held by Neymar, his father, and family businesses to secure payment of outstanding tax liabilities and applicable fines. The decision complied with a request from the Counsel of the Federal Treasury, which was also investigating the case.

The prosecutors reported that they had been collaborating with the tax authorities in investigating the suspects and their businesses for about two years. During this period, they gathered more than 5,000 sheets of documents, and heard statements from several witnesses. The case was based on this evidence as well as information obtained from international cooperation with Spanish authorities.

The tax avoided accounted for more than 55% of the payable tax, based on differences in the method for calculating tax rates. As an individual, Neymar would be required to pay 27.5% of his contract proceeds as income tax. But by using a corporate entity for receiving payments for services provided in Brazil, he was able to reduce that to 12.53%. In contracts with foreign companies, the amount of tax dodged may have exceeded 67%, because the tax rate on income earned by companies outside the country gets much lower, 8.88%.

Prosecutor Thiago Nobre explained one of the tricks: Neymar's transfer to Barcelona FC was a “one-time event taking place as a single deal. But the relevant payment was split into separate transactions that were logged as loans, compensation, wages and other pay, image rights, scouting, and business agency—and it has been established that most of these payments were made to different corporate entities within the Neymar Group.” A similar scheme is believed to have taken place while Neymar was a player at Santos, “for the same purpose: reducing the tax burden,” the prosecutor said.

The prosecutors have asked the Federal Court to convict Neymar Junior, his father Neymar Santos, and the Barcelona executives Alexandre Feliu and Josep Floresta for tax evasion and forgery. The executives at Santos football club as of the time the contracts were signed were cited as witnesses in the case. Investigations are still ongoing.

Agência Brasil has unsuccessfully tried to contact the player's press office.

Translated by Mayra Borges