Is the world's best soccer player also a tax dodger?
That's the accusation that Spanish tax authorities are making about Lionel Messi, who they say was involved in a 4.1 million euro ($5.4 million) tax evasion scheme. The Argentine is only the latest of a growing list of headline-grabbing fiscal-fraud cases that are captivating Spanish attention amid the country's grueling economic crisis.
Mr. Messi, who plays for the club Barcelona FC, paid “virtually no” Spanish income taxes on sponsorship deals worth 10 million euros between 2007 and 2009, Spanish economic crime prosecutors said Wednesday in their court filing against both Messi and his father, Jorge Horacio.
For months, tax-related scandals have gained media attention in Spain, publicly and in some cases legally implicating well known names from the country’s top bankers and politicians, to movie and music stars, business leaders, royalty, and, sure enough, athletes.
Experts agree that it’s not a question of increased tax evasion, but that countries struggling amid the crisis are more desperate for revenue amid fiscal trimmings. In Spain’s case, it is also feeling pressure to show the brunt of paying rising taxes is being shared by all.
However, some have suggested that authorities are selective in the cases they pursue, shielding their allies, but targeting high-profile names like Messi.
While unlikely, Messi could technically face prison time, though the court hasn’t even decided whether it has grounds to accept the case. Spanish Culture Minister Jose Ignacio Wert Thursday defended Messi’s right to presumed innocence, but warned “the law naturally is the same for everyone, even for the number one,” alluding to Messi’s undisputed reputation as the world’s best football player.
Messi denied any wrongdoing in a statement posted on his Facebook page, highlighting the fact that authorities had not previously contacted him. “We learned through the press about the actions initiated by Spanish prosecutors. This is something that surprises us because we have never committed any offense.”
“We have always fulfilled all our tax obligations following the advice of our tax advisers, who will clarify this situation,” Messi wrote from Guatemala, where he’s playing in a friendly match.
Prosecutors accuse Messi, who is now 25 years old, of not paying any taxes on sponsorship deals by selling his image rights to shell companies, set up in tax havens like Belize and Uruguay, that were ultimately controlled by his father, who is also Messi's manager. Several contracts – which include brands like Adidas and Pepsi, along with banks, airlines, video games, and more – would be paid directly to those shell companies, thus avoiding Spanish taxes, prosecutors claim.
Sports stars have a long history of such cases in Europe, including tennis stars Rafael Nadal, Arancha Sánchez Vicario, Steffi Graf, and Boris Becker, and soccer legends like Diego Maradona and Luis Figo.
Spain is still investigating Cameroon striker Samuel Eto’o over a 3.5 million euro tax evasion using almost identical methods as Messi allegedly did. Mr. Eto’o has passed on all responsibility to his agent and adviser.
In 2006, Spain sought to attract foreign talent – including athletes – by offering high-earners the possibility to declare taxes at a non-resident rate of 24 percent, in contrast to residents, who paid 45 percent. But the law was revised in 2010 to eliminate the loophole, forcing all residents with annual salaries of more than 600,000 euros a year to pay 43 percent.
Nobility have also been caught in a broadening dragnet. This week, three distant relatives of Spain’s King Juan Carlos were implicated in a court investigation into a Chinese-Israeli money-laundering ring that allowed wealthy Spaniards to hide their cash using shell companies and Swiss accounts for fiscal fraud purposes. Those investigated include former company executives.