The Chilean is being investigated over his tax affairs while he was playing for Barcelona between 2011 and 2013.
Spanish newspaper El Mundo Deportivo reported on Friday that the country’s Treasury had taken possession of Sanchez’s home in Barcelona after accusing him of defrauding the government out of £827,000.
The paper claims he used a shell company in Malta called Numidia to divert his earnings on image rights and therefore avoided paying the appropriate level of tax.
Last month, Sanchez’s agent denied the claims, saying in a statement: “Alexis Sanchez has perfectly obeyed every one of the laws imposed by the countries where he has resided.
“We ask the press and public at large for the upmost respect until the completion of the ongoing administrative and judicial process.”
Spain, football and tax avoidance
Sanchez is the latest player to become embroiled in an investigation on tax evasion, which has also caught out fellow Barcelona alumni Neymar and Lionel Messi.
In July, Argentinean footballer Messi and his father were sentenced to 21 months in prison by a Spanish court for tax fraud over €4.1m the pair squirrelled away in tax havens in Belize and Uruguay between 2007 and 2009.
Neymar and his father are also facing a two-year prison sentence and a $10.6m fine on corruption charges related to alleged irregularities during his transfer from Brazilian club Santos to Barcelona in 2013. Both have denied any wrongdoing.
Earlier this month, a group of 12 European newspapers, including El Mundo Deportivo, accused football legends Cristiano Ronaldo and Jose Mourinho of dodging millions of dollars in tax by channelling money to offshore tax havens such as the British Virgin Islands.
The Dutch newspaper NRC, alleges that Ronaldo moved €63.5m to the British Virgin Islands (BVI) at the end of 2014, while another claims that Mourinho moved €12m into a Swiss account owned by a BVI-based company.
Both Ronaldo and Mourinho have denied the claims.
The allegations are based on 18 million documents of leaked data, which according to the media outlets reveal widespread corruption at the heart of the sport.
The European Investigative Collaborations (EIC) consortium said it plans to release more details from the leaked documents under the banner “Football Leaks”.
Meanwhile, the EU said earlier this week it will introduce legislation next year that may force financial advisers to report “aggressive” tax planning schemes which help clients avoid paying tax.