Real Madrid coach, Carlo Ancelotti faces over 4-years in prison after being charged with defrauding the Treasury of £800,000 by prosecutors in Madrid

Real Madrid coach, Carlo Ancelotti could reportedly face over four years in prison after prosecutors in Madrid charged him with having defrauded the Treasury to the tune of over £854,000 (€1million), according to reports in Spain.

The Italian manager is said to have not paid the necessary tax during his first stint managing the Madrid club between 2013 and 2015, despite being registered as a resident in Spain for tax purposes.

Ancelotti allegedly declared his earnings from his Real Madrid salary but is accused of having omitted money earned from his image rights, instead transferring the sum to other entities.

The former Chelsea and AC Milan head coach has been charged with two crimes against Spain’s Public Treasury by the Provincial Prosecutor’s Officer in Madrid, and as per Marca, a prison sentence of four years and nine months has been requested should Ancelotti be found guilty.

The total sum in question stems from the fiscal years 2014 and 2015, with the first year reportedly seeing Ancelotti fail to declare £33,813 (€39,575) and the second £577,340 (€675,718).

The prosecutors’ official statement with the announcement of the charges alleges that the 64-year-old set up a ‘complex’ and ‘confusing’ network of trusts and companies that allowed the money earned from his image rights to be domiciled outside of Spain.

This, the prosecutors stated saw Ancelotti pursuing opacity in the face of the Spanish Public Treasury and the concealment of the real beneficiary of his income from his image rights, so that neither he nor any of the said companies, would have to pay taxes on the large amounts received in Spain or outside our country’.

According to prosecutors, Ancelotti transferred his image rights to Vapia Limited for a period of ten years for £21m (€25m) in July 2013, shortly signing after his first three-year contract with Real Madrid.

Ancelotti is then alleged to have appointed himself at the helm of the company, ‘granting him the maximum powers of action to manage his image rights’, before later reducing the length of the period covered to three years and dropping the sale price to £854,000 (€1m).

He was then said to have transferred 50 per cent of his image rights to Real Madrid in a private contract, with the other 50 per cent being held in an ‘unnamed’ and ‘undetermined’ company named Vapia LLP, which was domiciled in London.

‘In this way, the accused used the company Vapia LLP so that it formally presented itself to Real Madrid as the owner of the image rights even though it had not even been formally attributed to them, since the aforementioned transfer contract of 1 July 2013 was with Vapia Limited,’ the prosecutors’ letter continues.

During his time at the club and while domiciled in Spain, Ancelotti is claimed to have ‘omitted all income corresponding to the exploitation of his image rights’ when filing his self-assessed tax declarations, which in 2014 amounted to £1.1m (€1.2m), and £2.5m (€2.9m) in the 2015 financial year.