Real Madrid manager Carlo Ancelotti has found himself in hot water with Spanish officials over unpaid taxes. Prosecutors claim that the Italian coach did not pay the government the correct amount during his previous stay with the club. Ancelotti currently coaches the LaLiga club but was also in charge from 2013 to 2015.

According to Relevo, Ancelotti essentially declared his base salary with the Spanish team. Nevertheless, the veteran manager supposedly failed to report money earned from his image rights. The news outlet reports that omitting these extra funds adds up to around $1 million.

If found guilty of the crimes, Ancelotti could face a sentence of more than four years in prison. This punishment, however, may ultimately be significantly reduced. Spanish reports claim that a judge could essentially cut the sentence in half at an upcoming hearing. If this is the case, the coach may even serve a suspended sentence because this is his first serious infraction.

The manager reportedly funneled funds to a foreign company

Prosecutors in the case assert that Ancelotti initially failed to report $43,000 in added income during 2014. The Italian manager followed this up by not declaring an additional $734,000 the following financial year. According to Spanish officials, the coach set up a “complex” and “confusing” network to help avoid paying the extra taxes.

This included attaching the funds to a company outside of Spain. Officials claim that Ancelotti moved the money earned from his image rights to Vapia Limited in the summer of 2013. The timing of the transfer occurred right after the coach signed his first contract at Real.

“Ancelotti pursued 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 himself nor any of the companies, would have to pay taxes on the large amounts received in Spain or outside our country,” the prosecutors said in a statement.

The prosecutors went on to claim that Ancelotti set up this company and then appointed himself as the owner. The move, according to the officials, “granted him the maximum powers of action to manage his image rights” at the time. Vapia LLP was reportedly based 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 them, since the aforementioned transfer contract of July 1st, 2013 was with Vapia Limited,” continued the prosecutors.

Carlo Ancelotti will almost certainly have to pay huge fines in taxes case

Real fans will worry about the potential ramifications of the financial court case. Although Ancelotti was thought to be leaning towards leaving the club this summer, he recently signed a new contract extension. The new deal will keep the Italian at the helm of the Spanish side until 2026, assuming he is not in prison.

Nevertheless, it seems somewhat unlikely that the coach will serve significant prison time in the case. Because it is his first financial crime, Ancelotti and his lawyers will do their best to appease the prosecutors by paying a massive fine. The manager reportedly makes just $10 million per season at Real.