Carlo Ancelotti, the current manager of Brazil's national team, has been handed a one-year prison sentence by a Spanish court for tax fraud. The sentence stems from his first stint as Real Madrid manager in 2014, where he was found guilty of failing to pay tax on income related to his image rights. In addition to the prison sentence, Ancelotti was also fined €386,361.

Specifically, Ancelotti was accused of defrauding the Spanish public treasury in 2014 and 2015. Prosecutors argued that he only declared his salary in his Spanish tax returns, omitting income derived from his image rights. The court found that Ancelotti used a complex system involving trusts and offshore companies, including one in the Virgin Islands with no real economic activity, to hide this income. Spanish tax authorities proved that Ancelotti hid earnings from his image rights, which are payments companies make to use a person's name and face, while only declaring his Real Madrid salary. The specific amount of the fraud for 2014 was €386,361.93. Ancelotti was acquitted of tax offenses for 2015 because the court could not prove he had stayed in Spain long enough to incur tax liabilities.

Despite the sentence, Ancelotti is unlikely to serve any jail time. Under Spanish law, sentences under two years for non-violent crimes rarely require defendants without previous convictions to serve time in prison. It is expected that his sentence will be suspended, meaning he will avoid jail time as long as he doesn't commit another crime.

During the trial, Ancelotti maintained that he did not intend to defraud the treasury and that he simply followed the instructions of the club. He stated that he was only concerned with receiving a net salary of €6 million for three years and was unaware of any wrongdoing. He added that when Real Madrid proposed the image rights arrangement, he consulted his English advisor and believed everything was correct. He insisted he "never thought about committing fraud".

Ancelotti is the latest in a string of high-profile football figures to be investigated and convicted for tax evasion in Spain. Other notable cases include Lionel Messi, Cristiano Ronaldo, and Jose Mourinho. In many of these instances, the individuals chose to settle out of court by paying hefty fines. For example, Cristiano Ronaldo accepted a €18.8 million fine. However, Xabi Alonso, another former Real Madrid player, successfully fought his charges and was acquitted by Spain's Supreme Court in 2023.

The Brazil football confederation (CBF) has stated they are following the case. Ancelotti's press officer declined to comment.