Naming and shaming the celebrity tax dodgers

The Spanish tax authorities may not admit to carrying out “exemplary sanctions,” but over the years, round about tax-return time, celebrities from the worlds of sports, the arts and entertainment have found themselves unwillingly thrust into the limelight as a way of reminding the rest of us that nobody is above the law.

The most recent case to hit the headlines is that of opera singer Montserrat Caballé, who the Tax Agency says owes over €500,000.

The 81-year-old soprano will appear in court on May 9 to answer charges that she avoided income tax in 2010 by using an Andorra-based company to handle the revenue from her European performances, payments for which were made to an account in a bank in Andorra. Caballé lives in Barcelona, although for tax purposes she is registered in the neighboring tax haven. Caballé earned €2 million in the 2009-2010 tax year, and was due to pay €508,000 in tax.

Most of her work in 2010 was signed through contracts with Andorra-based firm Reial Classics S.L., while other contracts showed Caballé’s residence as Andorra, and included a clause stipulating that all payments should be made in cash, in checks or in transfers to the Andorra account.

Tennis player Arantxa Sánchez Vicario is still fighting a €3.5-million tax demand from 2009

Until 1981, very high exemption levels meant that most Spaniards did not have to file individual tax returns. The economic boom that began in the 1980s was characterized by the use of cash payments and widespread tax evasion.

The first high-profile case the tax authorities brought after the tax laws were overhauled was against Lola Flores, the larger-than-life flamenco singer and dancer from the 1950s and 1960s, who had dubbed herself Lola de España (Lola of Spain). She failed to file a tax return between 1982 and 1985. The case hit the headlines after prosecutors called for a two-and-a-half year prison sentence and a fine of 52 million pesetas (€312,000). “I didn’t know that this carried such a heavy punishment,” she said in a television interview at the time. “I knew that I had to pay, but I also had mortgages on apartments and shops to meet. I even had to sell one of my properties to pay the mortgages.” She then appealed to Spaniards to send her a peseta each.

Buying a property in a low-tax country is another way of avoiding the Spanish authorities. Andorra has proved a popular option over the years for wealthy Spaniards seeking to avoid paying their taxes. Tennis player Arantxa Sánchez Vicario, who is still fighting a tax demand for €3.5 million after a court found her guilty of evasion in 2009, claims to have lived in the mountain principality between 1989 and 1993.

Also resident there at different times, on paper at least, have been Arantxa’s brother Javier, opera singer Alfredo Kraus, model Judit Mascó, tennis player Carlos Moyà and rally driver Carlos Sainz.

Arantxa’s other brother, Emilio, chose Bulgaria as his tax domicile, while other notable names from the world of tennis such as Sergi Bruguera and Alberto Berasategui opted for Monaco, along with cyclist Abraham Olano and the late golfer Severiano Ballesteros.

Switzerland was the destination of choice for tennis player Conchita Martínez, along with racing drivers Pedro de la Rosa and Fernando Alonso and, from 2013, motorcyclist Jorge Lorenzo. Until 2010 Lorenzo had opted for London, alongside fellow motorcycle rider Dani Pedrosa. In 2013 motorcyclist Sete Gibernau was found guilty of evading €2.8 million in taxes between 2005 and 2006. Though he had claimed to live in Switzerland, the Tax Agency found that he was in fact living in Spain.

Tennis player Rafael Nadal’s businesses turned over €56 million between 2005 and 2011, but were registered in the Basque Country, where they were subject to lower tax rates than he would have had to pay in Mallorca, where he lives. Entertainer José Luis Moreno tried to do the same, but a court found against him, noting that his company Miramón Mendi did not carry out any of its activities in the region.

Singer Isabel Pantoja was sentenced to two years in prison in 2013 and fined €1,147,000 for her part in corruption and financial wrongdoing at Marbella City Hall while she was romantically involved with the resort’s former mayor Julián Muñoz.

Celebrity chef Sergi Arola also fell foul of the tax authorities last year, and his Michelin-starred Gastro restaurant was closed. He owed the tax authorities €148,000, and Social Security a further €160,000. He was obliged to sell a house and motorcycle he owned to raise the money, and was then able to reopen the restaurant.

Ana Torroja, former singer with 80s pop trio Mecano, was found guilty on April 9 of evading taxes in 2003, 2006, and 2007. She was fined €1.5 million and sentenced to five months in prison.