Carlos Alcaraz' coach Juan Carlos Ferrero due in high court after debt with Spanish tax agency

The Supreme Court of Spain has intervened in a highly significant case involving former tennis player Juan Carlos Ferrero and the Tax Agency.

The conflict revolves around the payment of 275,000 euros that Ferrero had to make to the tax authorities due to a potential incorrect taxation of his image rights. The National Court had ruled in favor of Ferrero in April of last year, prompting the Supreme Court to consider the case in order to establish legal precedent.

The central issue addressed by the Supreme Court is how athletes' image rights should be taxed, especially when they participate in promotional or advertising activities not directly related to their sports career. Ferrero's legal representation argues that these earnings are independent of his tennis activity, while the Tax Agency argues otherwise.

As they clarify, "the deduction for these concepts was 40% until 2008, and then it was reduced to 30%," but they point out that, in reality, what is under discussion "from a technical standpoint in this case is whether Ferrero is entitled to the deduction or not." They also argue that "not all the income he generated at that time necessarily relates to his activity as a tennis player."

To clearly separate his sporting activities from promotional ones, Ferrero signed an image rights transfer contract in 2001. This contract allowed a company to manage his image rights and pay him 95% of the income generated from their exploitation, deducting commissions and other fees.

During the inspection period by the Tax Agency, covering from 2007 to 2010, Ferrero was one of the world's leading tennis players, with significant advertising contracts and prize earnings. Furthermore, the tennis academy bearing his name in Alicante, the JC Ferrero Equelite Sport Academy, was involved in managing his image rights.

The settlement resulting from the income tax declarations for the fiscal years 2007 to 2010 was subject to dispute by Juan Carlos Ferrero. Initially, he appealed to the Regional Economic Administrative Court of the Valencian Community, which dismissed his case on November 20, 2014. Four years later, he filed an appeal with the Central Economic Administrative Court, which also ruled against the winner of the 2003 Roland Garros.

The underlying issue and what is currently at stake is that, for example, the contract signed with Joma stipulated that Ferrero should participate in "sports exhibitions"; the one with Air Europa directly referred to his "status as a professional tennis player and elite athlete," and the Mazda contract made "constant references to the use of the tennis academy as a means of exploiting the appellant's image."

In other words, as argued by the Tax Agency, these contracts contain "constant references to sports activity, either directly as an activity or as a transcendent aspect, or indirectly, including training, official or friendly competitions, exhibitions..."