Hunted By Spanish Tax Authority, Vallejo Leaves European Championship

Francisco Vallejo Pons left the European Individual Championship, currently underway in Batumi, Georgia, after the fifth round. On Facebook he revealed having troubles in his personal life, most notably being chased by the Spanish tax authority, which is trying to seize more than half a million euros.

Rated 2716, Paco Vallejo was the 4th seeded player at the European Individual, a strong tournament that is also a qualifier for the 2019 FIDE World Cup. (Chess.com is planning to publish a tournament report after it finishes.)

On Thursday afternoon, the Spanish top grandmaster posted a long and personal message on his Facebook page, which has 162 comments and was shared 139 times at the time of writing.

Vallejo starts saying that "an idyllic life can turn into a disaster at great speed," and then explains what has happened to him.

"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 6 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."

As it turns out, Vallejo has become the victim of an old Spanish law (which ceased to exist in 2012, a year after he stopped playing poker online) under which any online "gambling" earnings are subject to 47 percent taxes, while any losses cannot be deducted. The Spanish tax authority started to investigate Vallejo in 2016, and looked back for five years, just enough to decide his earnings still fell under the old law.

"As of 2016, lawyers begin, meetings begin with the [Spanish tax authority], I start canceling tournaments, skin infections begin due to nerves, I have to cancel my participation with the national team because I honestly cannot stand the pressure, in more than one game I practically have tears in the eyes.

To finish off all this, it coincides with my mother [losing money due to an investment loss by Santander bank] and with a very serious health infection abroad that nearly ends her life, and which I could not support because the [Spanish tax authority] has already taken everything I had and still claims more...

I thought I could with everything, I thought that bad luck would end one day, that I would continue to fight as if nothing had happened, and I have tried every day, for almost two years. It was a mistake to come to the European Championship, I was not prepared for that, although I would have loved it, the reality is stubborn, but anyway, this "only" is chess."

Vallejo says it's the first time ever that he left a tournament early, but that his mind is unable to endure long tournaments right now. 

Vallejo Pons at the Isle of Man tournament in October 2017. | Photo: Peter Doggers/Chess.com.

Speaking to David Llada for an article in El Mundo, Vallejo provided more details. Firstly, he notes that he was never a serious poker player.

"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."

Vallejo says he never really spent much time on poker, as his chess always came first. Over that short period, his earnings were a bit over a million, but his losses were slightly more than that. Nonetheless, he was contacted by the tax authority in 2016.

"The first thing I said was that they should have made a mistake with the figure (...). I had never given it any importance because I was sure I had never won or lost a very large number. In fact, it turns out that I have had losses: never, not once, I made a withdrawal from a bookmaker to my bank account, because simply, overall, I lost money."

Vallejo is not the only one in this situation obviously. As Llada pointed out, some players who had obtained modest gains, have managed to reach an agreement and pay only for their net profits. Others are still in trial. Are the inspectors aware that Vallejo actually had losses with poker?

"They are perfectly aware, but they have never wanted to consider the losses. They have already seized most of my savings."

In a later Facebook post, Vallejo explained the situation a bit more.

He writes:

"1 / You have 200 euros. You bet 100 euros a 1000 times, sometimes it doubles, and sometimes you lose. 499 times you win and 501 times you lose. For [the tax authority], you have earned 49,900 euros, when in reality you have lost your initial 200 euros! This happens because in 2011 the law was not adapted and compensation for losses was not taken into account.

2 / VERY IMPORTANT. It must be said that this is not a unique case in Spain, there are hundreds of equal cases. Many people who in their day played poker or sports betting for a hobby, and lost small numbers, are now involved in terrible judicial processes, with their accounts seized and their lives destroyed.

3 / This FLAGRANT injustice was corrected, and "improved" in 2012, where the previous law is "clarified", and as of that date, "losses" and "profits" can be compensated for actually paying for what one has earned. If you had the bad luck to play in 2011, your life can be destroyed. In an incomprehensible way, they did not apply retroactivity in the new law."

Vallejo's quotes were used with permission of David Llada.