Spanish Chess Master Pulls Out of Tournament Over Unpaid Poker Taxes

Last week, Francisco Vallejo Pons, a Spanish chess Grandmaster, pulled out of the European Individual Championship in Batumi, Georgia having made it through to the competition’s fifth round. Vallejo had previously won the event in 2013, and was this year’s fourth placed seed, with the tournament acting as an important qualifier for the 2019 Chess World Cup whose first place prize is massive $1.6 million.

The 35 year-old blamed his exit on an ongoing dispute with his country’s tax authority, who have been hounding him for a €500,000 ($617,000) tax bill after he briefly played online poker in 2011.

Idyllic Life Turned Disaster

After pulling out of the chess tournament, Pons provided a lengthy explanation on Facebook as to the anguish and pain he has been experiencing, with the piece going into detail as to how his idyllic life turned into a train wreck at great speed. As an extract of his post reads:

“We go back to the year 2011. I play some online poker, for fun, I’m not a gambler by any means. I lost everything, a few thousand and I stopped playing. Then I stopped. In 2016 I received a letter from the [Spanish tax authority] requesting more than six figures! More than half a million euros because I played poker and I lost. It seems a macabre joke, but it is not, from that moment begins a snowball that crushes you.”

Since then, Pons says that he has endured a great deal of stress, and even suffers from skin rashes due to nerves. As a result, he said that he has had to start cancelling tournaments, as well as his participation with the national team because the situation is now interfering with his focus and concentration.

Overall Net Loss for 2011

According to Francisco Vallejo Pons, he won around €1 million in 2011 playing online poker, but once buy-ins were included actually ended up making a small net loss overall for the year. Pons soon realized that the game was not for him, and as he explained in an interview with El Mundo recently:

“I would say that I was not even a big fan. I read some books at the time, but I do not fit at all in the profile of a ‘player.’ I thought I could win, and when I realized it was not like that, I left it. It is a very repetitive game and, unlike chess, you really do not enjoy playing a lot.”

Spanish Tax Law

Unfortunately for Pons, Spanish tax laws in 2011 required all online gambling winnings to be taxed at 47%, with no allowance made for the deduction of losses. Despite the unfair law subsequently changing in 2012, the Spanish tax authority is still demanding that he hands over over €500,000 in taxes, and according to Pons have already seized most of his savings.

These days, poker players are able to deduct losses from their accounts, but anyone unfortunate to have played before the law changed currently faces a similar situation to Pons, with no retroactivity having been applied to past cases. As he explains, many people who played poker or wagered on sports as a hobby back then and lost a small amount of money are now being targeted by the tax authority, and getting caught up in judicial processes, with their accounts having been seized and their “lives destroyed.”

Hardline Tax Authority

The Spanish tax authority is one of the country’s with the toughest reputation when it comes to dealing with perceived tax evaders. Gambling companies which have been pursued by the organization in the past includes Unibet and 888, which then had to pay Spain million of dollars in settlements fees for their online gambling activity between 2009 and 2011.

In the meantime, soccer players such as Lionel Messi, Xabi Alonso, Sergio Ramos and Javier Mascherano have all been pursued for huge tax bills, while Princess Cristina was even stripped of her Duchess of Palma de Mallorca title on account of tax-related allegations made against her.