5th December 2022
It’s been another busy month in the global tax market, with a number of major cases highlighting why it’s never been more important to ensure you’re operating compliantly when working overseas. With governments now handing out major fines and prison sentences, in some cases, contractors must prioritise their compliance if they want to avoid significant punishment. As you’re about to see, status, wealth and global recognition won’t stop authorities from hunting down anyone they suspect of breaking the law.
Police arrest suspected tax evader in Spain after 3 years on the run
Authorities in Spain have arrested a man in the Malaga city of Estepona who has been on the run for three years after being accused of playing a key role in avoiding excise tax on alcohol. Prosecutors allege that the individual defrauded the French Government out of €80m in tax between 2014 and 2018. The case involved investigators from France, Spain and the UK who believe he used fake documents and money laundering to help facilitate the tax fraud scheme. European authorities posted a European Arrest Warrant in 2019 and finally managed to track the 60-year-old down despite him changing addresses on a regular basis. They were aided by Estepona’s UDYCO organised crime unit who worked to track him down in Malaga, despite his address being listed as being in Marbella. This case highlights the extent that authorities will go to in order to tackle evasion, and the levels of cooperation that they will show when it comes to taxes.
Tax evasion case against Icelandic band Sigur Ros continues
Sigur Ros have toured the world and played at some the biggest venues around, however that hasn’t prevented the Icelandic band from landing themselves in hot water with domestic authorities. The band were accused of tax evasion in Iceland back in 2018, with all members denying involvement. However, it was revealed earlier this month that Icelandic prosecutors will proceed with charges of tax fraud against lead singer ‘Jonsi’ (Jon Por Birgisson). The other band members have been cleared of charges, however according to the band’s defence attorney, prosecutors are investigating the front man’s finances and those of his company, Frakkur. Both he and his accountant have been accused of not submitting tax returns from 2010-2014, with accusations that they owe up to $1m. Thirteen homes and office premises, two cars and two motorcycles were seized while both individuals’ finances have been frozen. The band has suggested that, despite them boosting the country’s booming tourist economy, Iceland is ‘now treating us like criminals’. The case continues, however it’s likely to maintain front page status such is the popularity of Sigur Ros on the North Atlantic Island.
Germany sentences Maple Bank executives for tax evasion
Following a mammoth period of negotiations, former Maple Bank boss, Wolfgang Schuck, was sentenced to four years and four months for his role in a major tax evasion case that forms part of the ‘Cum-Ex’ scandal. Schuck was tried in the same courtroom in Frankfurt Regional court that’s usually reserved for murder trials, and the case has captured public attention with the significance of the punishments being handed out. In addition to the lengthy stint in jail, Schuck must also pay a fine of €96,000 and will have assets worth €2.9m confiscated from him and his family. He wasn’t the only one facing trial; an American executive was also sentenced to four years and two months imprisonment while a former securities dealer is facing three and half years for aiding and abetting tax evasion. The presiding judge described the case as ‘unprecedented in the Federal Republic’ and estimated that the cum-ex transactions and multiple refunds of capital gains tax carried out by members of the Canadian-German bank had cost the economy as much as €374m. Such is the severity of the case that even those who aided authorities by contributing key figures and an understanding of internal processes at the Bank were handed lengthy suspended sentences and significant fines to deal with. This case shows that, despite the support of extremely well-funded legal teams, these executives couldn’t escape the grasp of European authorities. And if they can’t, what chance does the average contractor have?
Former Aston Villa striker faces 2 years in Norwegian prison for tax evasion
And finally, former Aston Villa, Valencia and Norway striker John Carew is on the verge of a 2-year prison sentence for tax evasion. The retired forward has already plead guilty to charges of fraud, however prosecutors from Oslo District Court have requested that he is given time in prison along with a fine of at least £45,000. Carew has claimed that he failed to disclose his earnings to Norwegian authorities when working abroad due to receiving bad advice, with the case covering his time in England, France, Italy, Spain, Turkey and Norway. He argued that his friend, lawyer and former agent Per A. Flod had advised him not to disclose his income and said ‘I trusted him blindly, I have been convinced that he was right. He controlled me almost like a puppet.’ The striker represented Norway 91 times, scoring 24 goals and was a three-time recipient of the Norwegian Footballer of the Year, however this hasn’t prevented authorities from closing in on him, with it looking more than likely that Carew will face time in prison.
Staying compliant as a contractor working overseas has never been more challenging, with complex compliance processes, lengthy due diligence and more day-to-day management of finances required to stay on the right side of new regulations that are being released on a regular basis. If you’re in any doubt about your status, and want to speak to a specialist firm with years of experience working with contractors around the world, then get in contact before it’s too late.
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