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Interesting that Messi had tax problems in Spain as well. Neither of these guys are filling out their own taxes. Why did their accountants think it was a good

by pitt1980 8y ago

Interesting that Messi had tax problems in Spain as well. Neither of these guys are filling out their own taxes. Why did their accountants think it was a good idea to complete their taxes in a way that wound up getting them in trouble? Or why did Spain think these guys were alluring targets to spend finite prosecutorial resources on?

charlesdm 8y ago
The problem is likely that they have no leverage. If they were a company owner employing hundreds or thousands of people, with the power to fire them all and relocate, I'm not sure they would see the same outcome. One must remember that (cross-border) tax law is highly ambiguous. Since you can arrange your own affairs in the most tax efficient way, everyone always tries to get a beneficial outcome. If you add an international component to that, you'll quickly end up in situations where there often is no clear right or wrong answer because tax systems don't look at certain things in the same way. Spain isn't the best place to live if you have money, in particular due to the wealth tax.
MordodeMaru 8y ago
Spain, or its tax agency cannot cover (or will not cover) all fraud areas. It will creat FUDs with big cases to have everyone in line from that moment on, but it is really difficult also to cover all ground.
pjc50 8y ago
The answer to both questions is surely "several million dollars"? This stuff happens a lot. Celebrities don't make money through a business front nor do they get to class it as capital gains. It's all "income", so the incentive to turn it into a cheaper tax category or hide it offshore is huge. See also the Glasgow Rangers collapse due to tax fraud.
- pitt1980 8y ago
  I would think protecting their image for endorsement potential is worth more than even millions of dollars of tax savings
- rtpg 8y ago
  I'm sure celebrities can easily package their offerings as an LLC or the like. It's just that then you can't spend it however you like. You want to spend your money however you like? That's income. "They can't play tax tricks to avoid income tax" is the system working, not a bug
pylus 8y ago
Mourinho (a famous coach) too.
anitil 8y ago
I can't find the episode, but Planet Money had an episode where they found the US tax department made a deliberate target of celebrities, with the expectation that public prosecution of these people (think Martha Stewart) would result in higher tax compliance. This makes them a better ROI than your local greengrocer.

charlesdm 8y ago

The problem is likely that they have no leverage. If they were a company owner employing hundreds or thousands of people, with the power to fire them all and relocate, I'm not sure they would see the same outcome. One must remember that (cross-border) tax law is highly ambiguous. Since you can arrange your own affairs in the most tax efficient way, everyone always tries to get a beneficial outcome. If you add an international component to that, you'll quickly end up in situations where there often is no clear right or wrong answer because tax systems don't look at certain things in the same way. Spain isn't the best place to live if you have money, in particular due to the wealth tax.

MordodeMaru 8y ago

Spain, or its tax agency cannot cover (or will not cover) all fraud areas. It will creat FUDs with big cases to have everyone in line from that moment on, but it is really difficult also to cover all ground.

pjc50 8y ago

The answer to both questions is surely "several million dollars"? This stuff happens a lot. Celebrities don't make money through a business front nor do they get to class it as capital gains. It's all "income", so the incentive to turn it into a cheaper tax category or hide it offshore is huge. See also the Glasgow Rangers collapse due to tax fraud.

pitt1980 8y ago
I would think protecting their image for endorsement potential is worth more than even millions of dollars of tax savings
rtpg 8y ago
I'm sure celebrities can easily package their offerings as an LLC or the like. It's just that then you can't spend it however you like. You want to spend your money however you like? That's income. "They can't play tax tricks to avoid income tax" is the system working, not a bug

pylus 8y ago

Mourinho (a famous coach) too.

anitil 8y ago

I can't find the episode, but Planet Money had an episode where they found the US tax department made a deliberate target of celebrities, with the expectation that public prosecution of these people (think Martha Stewart) would result in higher tax compliance. This makes them a better ROI than your local greengrocer.