Carlo Ancelotti has been accused with tax fraud, and a report claims that he may need to appear in court in Spain.
El Mundo reports that the Italian is one step away from being prosecuted with failing to declare €400,000 following the conclusion of an inquiry into him.
The amount he is allegedly concealing has to do with his image rights in 2014, one year after his arrival on the Santiago Bernabeu side.
In recent years, tax officials have targeted a number of well-known figures in Spanish football, including Ancelotti.
Cristiano Ronaldo, a former star for Real Madrid, received a two-year suspended prison term after being accused of tax cheating between 2011 and 2014.
Barcelona icon, Lionel Messi was also hit with a suspended 21-month sentence related to €4.1 million worth of tax fraud between 2007 and 2009.
Ancelotti is currently in his second spell as Madrid coach, having returned to the club in 2021.
The 64-year-old has entered his final year in the role, however, having already agreed to take over as Brazil coach in 2024.