International footballer, Lionel Messi, will now be involved in a criminal trial after an appeal against being named in an alleged tax fraud case was rejected by a judge in Barcelona.
The appeal was based on the premise that there was no evidence that the player had been involved in any wrongdoing. The captain of the Argentina squad had his father manage all of his financial affairs and act as his representative. The fraud was alleged to have began before the footballer came of age.
The public prosecutor in Spain challenged the appeal and the judge rejected the appeal, the judge said:
“In this type of crime, it is not necessary for someone to have complete knowledge of all the accounting and business operations nor the exact quantity, rather it is sufficient to be aware of the designs to commit fraud and consent to them”
Messi along with his father Jorge Messi, have five days to appeal against the ruling.
Background to the Case
Lionel Messi, four-time winner of Player of the Year, along with his father Jorge Messi, stand accused of defrauding authorities of more than €4 million.
Whilst both deny the allegations, it is suspected that they used companies in the UK, Switzerland, Belize and Uruguay to sell the rights to use images of the football star in 2006-2009 – this meant that they were able to avoid tax obligations in Spain.
However, in August this year, Jorge Messi made a payment of €5 million to the Spanish Tax authorities, which accounted for the €4.16 million owed plus interest accrued. Lionel Messi stated that he and his father:
“Have never committed any infringement. We have always fulfilled all our tax obligations”.
It is estimated that Messi’s net salary is around €16 million per season – not including the millions made from endorsements by commercial sponsors such as Adidas, PepsiCo and Procter & Gamble.
However, a complex set of companies based in the UK, Switzerland, Belize and Uruguay were used to disguise his income from tax authorities.
Initially, tax prosecutors lodged a writ at a court in Gava, just outside Barcelona where Messi lives. In response to this Messi said:
"We have just known through the media about the claim filed by the Spanish tax authorities. We are surprised about the news, because we have never committed any infringement. We have always fulfilled all our tax obligations, following the advice of our tax consultants, who will take care of clarifying this situation."
Earlier this year, the public prosecutor in Spain put forward that Jorge Messi was entirely responsible for the decision to use the corporate structure. However, a court in Barcelona has rejected this appeal and stated that Lionel Messi must stand trial for the alleged tax evasion. Messi has 5 days to appeal the decision.
The Pending Trial
Lionel Messi a now faces criminal charges over the multi-million euro tax evasion scheme. It is speculated that the Spanish prosecutors will focus on the secrecy aspects of the case. The prosecutors say that the basis of the scheme was hiding the identity of the true owners of the companies, which were registered in the UK, Switzerland, Uruguay and Belize.
The deals were structured to keep Messi’s name hidden, with the money being ciphered through the network of companies to make it increasingly opaque.
Messi denies the allegations and says his father carried out the deals without his knowledge. Whilst his father is most likely to have a greater role in the tax avoiding transactions, the court in the appeal said that Lionel Messi “could have known and consented” to the implementation of the corporate structure to avoid tax liabilities. On these grounds the prosecution of Lionel Messi is to go ahead.
The potential sentence for Messi if found guilty, could be two to six years in jail for each of the three tax evasion charges against him. He may also be required to pay a fine of up to six times the amount he defrauded the authorities of.
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