17th December 2021
Tax authorities in the EU and around the world are continuing the fight against tax fraud, tax evasion and money laundering with vigour. Organisations of all sizes, including global recruiters placing contractors abroad, are being reminded that they need a full compliant contractor management solution to eliminate the risk of potential prosecution or fines for non-compliance.
In our latest blog, we look at some of the latest stories around Europe, clear examples of the intent to clamp down on any wrongdoing.
Tax fraud in Portugal
Corruption and financial impropriety have long been endemic in the most popular game of all with club owners and officials of football clubs often making the headlines for circumventing local tax authorities. Jorge Nuno Pinto da Costa, the chief executive of one of Portugal’s most famous clubs, the former European champions of FC Porto, is being investigated for suspected tax fraud and money laundering linked to transfer dealings and the payment of €9m to football agents.
It is not the first time that the colourful 83-year-old, who has been club president since 1982, has been implicated in corruption. Back in 2004, he was suspected of having bribed match officials in the aptly named ‘golden whistle’ scandal which involved illicit payments amongst other questionable behaviour. Four years later the Portuguese Professional League suspended him for two years, the club fined €150,000 and relegated to the second division. The same fate befell Boavista FC, who was fined a higher amount of €180,000.
Da Costa isn’t alone among the most senior Portuguese executives to be indicted. Luís Filipe Vieira, his counterpart at SL Benfica, the Lisbon giant and two-time European Cup winners, has also been part of investigations alleging tax fraud and money laundering involving millions of euros. The 72-year-old was placed under house arrest in July 2021 and relieved of his duties as club president while being ordered to pay bail of €3m. His son Tiago was among others detained by local authorities.
It was the Portuguese ‘Football Leaks’ whistle-blower, Rui Pinto, who exposed the level of corruption and fraud, with millions of documents revealing the widespread use of offshore tax havens to conceal financial dealings and hide income from tax authorities. This not only affected clubs in Portugal but also around Europe and the rest of the world. Pinto was arrested in Hungary and extradited to Portugal in 2019 facing charges of extortion and hacking.
The revelations created a domino effect as the financial affairs of other clubs, agents and players were laid bare. Among them was superstar and current Manchester United player, Cristiano Ronaldo, who agreed to pay Spanish tax authorities €18.8m, having been charged for tax evasion in 2019. Former FIFA and UEFA presidents, Joseph ‘Sepp’ Blatter and Michel Platini, have both been charged in relation to a payment of €2m Swiss francs in 2011 made by the Swiss administrator to the former French international player.
Combating tax fraud in Europe
In other news, the ‘cum-ex’ scandal, referred to as the ‘German dividend tax scandal’ in which different parties could claim the same dividend tax refund and which cost European tax authorities billions of euros in lost revenue, continues to rage in Ireland. As revealed by The Irish Times, a Department of Finance official referred to the “reputational” impact to Ireland caused by the former Bank of Ireland subsidiary – Bank of Ireland Securities Services – and the Dublin offices of Investec and BNP Paribas, which were used by the scheme perpetrators.
The Czech National Crime Agency (NCOZ) also cooperated with the Luxembourg based European Public Prosecutor’s Office (EPPO) for the first time. It played a key part in a major operation to infiltrate criminal rings accused of money laundering in the Czech Republic and Slovakia, which cost German authorities €23m. Several properties were searched and one person arrested.
The number of investigations by local tax authorities into tax fraud, tax evasion and money laundering is on the increase across the EU. Organisations and individuals suspected of alleged tax wrongdoing are being pursued and brought to justice in a bid to recoup millions of euros that are due in back taxes. Whether a football club, financial institution or global recruiter placing contractors, the need to remain tax compliant must remain a business priority. The stakes are simply too high. Should you need guidance on contractor compliance and tax, please get in touch with our 6CATSPRO experts.
