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EU court cancels Sh2 billion Real Madrid state aid refund

In a decision handed down in July 2016, EU Competition Commissioner Margrethe Vestager said Real madrid and the Madrid City Hall had agreed an illegal transaction involving the sale of municipal land © AFP/File / Franck FIFE

LUXEMBOURG, Luxembourg, May 22 – A top EU court has cancelled a European Commission decision from 2016 that forced Spain to recover Sh 2 billion (18.4 million euros) from Real Madrid because it considered a real estate refund as illegal state aid.

“The Commission could not classify the disputed measure as state aid”, as it did not “sufficiently demonstrate that it conferred an advantage to the plaintiff,” said the ruling of the General Court of the European Union.

In a decision handed down in July 2016, EU Competition Commissioner Margrethe Vestager said the club and the Madrid City Hall had agreed an illegal transaction involving the sale of municipal land.

In the deal, the club had paid 595,000 euros in 1998 for the land, but the operation had not come to fruition for technical reasons and authorities paid Real Madrid 22.7 million euros in compensation in 2011.

But according to a Barcelona firm mandated by the commission, it should have paid only 4.3 million euros leaving the land in question overvalued by 18.4 million euros, giving Real Madrid an unjustified advantage over other clubs.

Real Madrid lodged an appeal against this decision in October 2016.

“I am absolutely convinced that we will win,” club president Florentino Perez said at the time.

In February 2019, the European Court of Justice annulled another commission decision involving four Spanish clubs, including Real, but also Barcelona, Osasuna and Athletic Bilbao, to repay illegal state aid.

These clubs were accused of having benefited, without justification, of a corporate tax rate five percent lower than that of other similar companies.

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However, the General Court decided the commission had erred in its assessment, not having already sufficiently proved that the contested measure was illegal.

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