4 ms·

I keep seeing news titles about football playes like Cristiano Ronaldo and celebrities like Shakira getting slapped with back taxes and suspended jail sentence

by petre 5y ago

I keep seeing news titles about football playes like Cristiano Ronaldo and celebrities like Shakira getting slapped with back taxes and suspended jail sentences in Spain. A complex tax system and unclear rules are just another opportunity for abuse by tax authorities. https://m.timesofindia.com/sports/football/top-stories/messi-contract-highlights-tax-burden-for-players-in-spain/amp_articleshow/80654335.cms https://m.timesofindia.com/sports/football/top-stories/messi...

thefounder 5y ago
The abuse is both ways...see how much tax Amazon and Apple is paying. Hint: not much!
- CodesInChaos 5y ago
  They are paying VAT (revenue tax), but avoid corporate tax (profit tax).
  - Y_Y 5y ago
    At least in Spain a company will usually be able to avoid VAT on purchases they make. It is true that they charge and collect VAT on their sales to consumers. The majority off tax paid by these companies is on what they pay their employees.
    - tluyben2 5y ago
      This is very hard in reality though especially on goods from abroad; your NIE has to be on the invoice officially (which companies like BA do not do for you and I flew with them a lot for business) and while this is not strictly enforced, I got slapped many times on valid business purchases. The gestor told me to just deduct 75% of the deductible vat to not get onto the radar. Ugh.
      - Y_Y 5y ago
        This is too real. The ultimate tax is on your time, especially as a foreigner.
  - thefounder 5y ago
    VAT is not the only tax to be paid in the EU. Not to mention they pay less VAT than the local businesses through various schemes(i.e registering the company that makes the sale in a country with lower VAT)
    - CodesInChaos 5y ago
      > i.e registering the company that makes the sale in a country with lower VAT Do they? The Amazon invoices I receive have German VAT.
    - petre 5y ago
      That doesn't work anymore and it only worked for small volumes, not bigger retailers. They previously needed a VAT number from the state the custumer was in, which was very cumbersome. Now they just add the destination state's VAT on the invoice and I think the VAT is settled between states.
  - 988747 5y ago
    VAT is not a revenue tax. VAT is the tax paid by consumers not by the company. Company only acts as tax collector. The weird thing is this: they collect VAT on everyting they sell, but then, for everything they buy (raw materials, office supplies, etc.) they can substract amount of VAT paid for those from the amount of VAT collected. So purchases by companies are basically VAT-free. And of course some tax optimisation schemes come into play here, with some companies getting ahead on VAT (like, actually getting a VAT refund from the government, instead of paying it).
notahacker 5y ago
What makes you think the tax authorities were the ones being abusive, and not the very expensive tax specialists hired on behalf of a class of people moaning that it's not fair that people earning €100m a year don't pay smaller proportions of their income in taxes than people earning €100k?
- notahacker 5y ago
  All these downvotes, and not one person prepared to explain why portions of a Spain-based footballer's earnings from Spanish companies accruing to Belize based companies is the tax authorities being abusive... Or why the tax authority would prefer a situation where the tax code is sufficiently complex the Messis and their financial advisers think such an evasion scheme is worth trying to one where they just receive a percentage of his very large earnings without any fuss or court case, like your average employee of a Spanish company. The reality is the reverse: people with a lot of income to disguise and creative tax planners love finding ambiguities and imaginative interpretations of deductions and exemptions designed for other purposes, and tax authorities would rather not be chasing them through the courts years later.
Y_Y 5y ago
It's worth noting that there is special provision for these kinds of cases: https://en.wikipedia.org/wiki/Beckham_law https://en.wikipedia.org/wiki/Beckham_law Of course this doesn't protect you from outright tax evasion. Also there are some rules like the calculation of capital gains that differ from the US system, meaning that you are not necessarily protected from double taxation, since each system taxes a different transaction.
- tluyben2 5y ago
  The NHR in Portugal allows this for everyone (not wealthy per se).
  - bwb 5y ago
    Anyone moving to Portugal under NHR is by definition wealthy :)
    - tluyben2 5y ago
      How so? It is attractive for more reasons than paying less tax for wealth. I know quite a lot of wfh devs who moved in the past year.
      - bwb 5y ago
        ya those people are all wealthy :)
        tluyben2 5y ago
        I guess our definition of wealthy is different. There are bucketloads of 'nomads' under the NHR that have no wealth and just get money from outside PT: I am talking a few 1000 per month. What is wealth for you? The Beckham law wealth is what I would call wealth and sure there are people using nhr to move their wealth from some fund to their person within the 10 years without paying tax. However, unlike the Beckham law, for the NHR you do not need capital to benefit.

by petre 5y ago

thefounder 5y ago

The abuse is both ways...see how much tax Amazon and Apple is paying. Hint: not much!

CodesInChaos 5y ago
They are paying VAT (revenue tax), but avoid corporate tax (profit tax).
- Y_Y 5y ago
  At least in Spain a company will usually be able to avoid VAT on purchases they make. It is true that they charge and collect VAT on their sales to consumers. The majority off tax paid by these companies is on what they pay their employees.
  - tluyben2 5y ago
    This is very hard in reality though especially on goods from abroad; your NIE has to be on the invoice officially (which companies like BA do not do for you and I flew with them a lot for business) and while this is not strictly enforced, I got slapped many times on valid business purchases. The gestor told me to just deduct 75% of the deductible vat to not get onto the radar. Ugh.
    - Y_Y 5y ago
      This is too real. The ultimate tax is on your time, especially as a foreigner.
- thefounder 5y ago
  VAT is not the only tax to be paid in the EU. Not to mention they pay less VAT than the local businesses through various schemes(i.e registering the company that makes the sale in a country with lower VAT)
  - CodesInChaos 5y ago
    > i.e registering the company that makes the sale in a country with lower VAT Do they? The Amazon invoices I receive have German VAT.
  - petre 5y ago
    That doesn't work anymore and it only worked for small volumes, not bigger retailers. They previously needed a VAT number from the state the custumer was in, which was very cumbersome. Now they just add the destination state's VAT on the invoice and I think the VAT is settled between states.
- 988747 5y ago
  VAT is not a revenue tax. VAT is the tax paid by consumers not by the company. Company only acts as tax collector. The weird thing is this: they collect VAT on everyting they sell, but then, for everything they buy (raw materials, office supplies, etc.) they can substract amount of VAT paid for those from the amount of VAT collected. So purchases by companies are basically VAT-free. And of course some tax optimisation schemes come into play here, with some companies getting ahead on VAT (like, actually getting a VAT refund from the government, instead of paying it).

notahacker 5y ago

What makes you think the tax authorities were the ones being abusive, and not the very expensive tax specialists hired on behalf of a class of people moaning that it's not fair that people earning €100m a year don't pay smaller proportions of their income in taxes than people earning €100k?

notahacker 5y ago
All these downvotes, and not one person prepared to explain why portions of a Spain-based footballer's earnings from Spanish companies accruing to Belize based companies is the tax authorities being abusive... Or why the tax authority would prefer a situation where the tax code is sufficiently complex the Messis and their financial advisers think such an evasion scheme is worth trying to one where they just receive a percentage of his very large earnings without any fuss or court case, like your average employee of a Spanish company. The reality is the reverse: people with a lot of income to disguise and creative tax planners love finding ambiguities and imaginative interpretations of deductions and exemptions designed for other purposes, and tax authorities would rather not be chasing them through the courts years later.

Y_Y 5y ago

It's worth noting that there is special provision for these kinds of cases: https://en.wikipedia.org/wiki/Beckham_law https://en.wikipedia.org/wiki/Beckham_law Of course this doesn't protect you from outright tax evasion. Also there are some rules like the calculation of capital gains that differ from the US system, meaning that you are not necessarily protected from double taxation, since each system taxes a different transaction.

tluyben2 5y ago
The NHR in Portugal allows this for everyone (not wealthy per se).
- bwb 5y ago
  Anyone moving to Portugal under NHR is by definition wealthy :)
  - tluyben2 5y ago
    How so? It is attractive for more reasons than paying less tax for wealth. I know quite a lot of wfh devs who moved in the past year.
    - bwb 5y ago
      ya those people are all wealthy :)
      - tluyben2 5y ago
        I guess our definition of wealthy is different. There are bucketloads of 'nomads' under the NHR that have no wealth and just get money from outside PT: I am talking a few 1000 per month. What is wealth for you? The Beckham law wealth is what I would call wealth and sure there are people using nhr to move their wealth from some fund to their person within the 10 years without paying tax. However, unlike the Beckham law, for the NHR you do not need capital to benefit.