Spain lionel messi royalties switzerland offshore companies tax evasion court case
Spanish prosecutors have dropped all tax fraud charges against FC Barcelona’s Argentinian star Lionel Messi, but will pursue the case against his father. Jorge Horacio Messi and the footballer were accused of defrauding Spain’s tax office by not paying €4m (£2.9m, $4.5m) due in taxes between 2007-09.
If convicted, the senior Messi could face prison time of up to 18 months and a fine of €2m. Since the charges were made public, the Argentinian captain has taken steps to clear the tax debt, having made a “corrective payment” of €5m.
The prosecutors’ move in a Gava court (near Barcelona) was still not an exoneration for Messi from the tax mess. The State Attorney needs to agree with the decision of the Prosecutor’s Office’s. If the two disagree, prosecutors will still have the option of pursuing action against Messi. Had the soccer superstar been convicted, he would have faced a possible prison time of up to five years and a fine of up to €24m.
According to a complaint filed by the Spanish tax authorities in 2013, Messi along with his father, Jorge, used offshore companies to avoid paying taxes on royalties and other licensing income. These incomes were related to Messi’s image rights from contracts with Banco Sabadell, Danone, Adidas, Pepsi-Cola, Procter and Gamble, and the Kuwait Food Company, among others, that he earned while playing for FC Barcelona, a club registered in Spain. The scheme allegedly also included an elaborate network of transfers through the UK and Switzerland.
In October 2014, the Gava court had ordered the 27-year-old soccer star to face trials regardless of whether he knew anything about the alleged tax fraud or not. A further ruling by a high court in Barcelona in June this year rejected Messi’s appeal to be exonerated of all charges. Tuesday’s filing by prosecutors, however, put the onus on Jorge, who said he was in control of his son’s economic interests and taxes and thus should face the consequences and not Messi.
In the documents released by the court the prosecutors stated, “It has not been proven that [Lionel Messi’s] lack of knowledge was deliberate or was done with the aim of defrauding the Treasury.” Messi however has been asked to stand as a chief witness in the case against his father.
