Needs an accountant: Lionel Messi

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FC Barcelona star Lionel Messi got out of his car to a chorus of jeers, and walked up the steps of Barcelona’s provincial court.

It was day three of his tax-fraud trial and the first day he’d shown up to court.

Messi and his father, Jorge, were accused of funnelling earnings from imaging-rights deals into a complex web of shell companies in tax havens such as Belize and Uruguay, evading €4.16m in tax between 2006 and 2009.

Jorge had been acting as his son’s financial adviser since he started playing professional football. When Lionel turned 18 in 2005, he signed a series of documents relating to new licensing revenues and later ratified documents that had been signed on his behalf.

The Economic Crime Unit of Barcelona and prosecutor Raquel Amado first brought the allegations in 2013. Lionel responded through his Facebook page that he had found out about the case through the media and had done nothing wrong. “We have never committed any infringement. We have always fulfilled all our tax obligations,” he said.

Despite their protests of innocence, Messi and his father made a ‘corrective payment’ of €5m that same year, just comprising the tax owed plus interest. But this wasn’t enough to get the Spanish tax authorities off their backs.

Indeed, the endorsement income of sports stars has become a focus for governments around the globe. As these earnings are not attached to any kind of physical performance or presence, they are easier to conceal than earnings from salary or winnings. And Lionel Messi is the world’s second-highest paid sportsman, earning $81.4m in 2015, $28m of which came from endorsements, so he would make a high-profile example for other wealthy tax dodgers.

Ignorance is no defence

A trial date was set for 31 May 2016. Messi’s defence was simple: pure ignorance. He claimed he never read a single document put before him and signed them without scrutiny. “All I know about is playing football and winning. I left it all to my dad,” he told the court. “The truth is: no, I didn’t know. As my dad explained earlier, I just dedicated myself to playing football. I put my trust in my father and in the lawyers who had decided to manage this thing. I didn’t have a clue about anything.”

Unfortunately for Messi, that argument didn’t hold water, especially as he was listed as the sole administrator of one of the companies. Both Jorge and Lionel were found guilty and sentenced to 21 months in jail each. However, Spanish courts tend to suspend jail sentences of less than two years for first-time offenders. As a result, neither Messi saw the inside of a prison cell.

Whether Messi was completely ignorant of his tax affairs or not, a lack of interest in financial affairs is not a valid defence when you’ve ratified everything put under your nose. Hopefully, he’ll put his trust in some real advisers, or at least read what he’s signing, in future. We have always fulfilled all our tax obligations,” he said.

This piece was first published in Accounting Technician magazine. AAT members can login to the archive to read more of the March/April issue with great reads on Making Tax Digital and public trust in business.

Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.

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