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Messi answers tax charges in court

Barcelona superstar Lionel Messi has appeared in court to answer charges of evading €4.16 million ($5 million) in taxes in a case that stunned the sporting world.

Messi answers tax charges in court
Photo: Josep Lago/AFP

Dressed in a dark jacket and white shirt, the 26-year-old Argentine international made no comment before or after the closed-door hearing on Friday at a court in Gava, the coastal suburb of Barcelona where he lives.

Testimony by the four-time winner of the FIFA World Player of the Year award revealed his desire to resolve the matter, Messi's lawyer, Cristobal Martel, told reporters after the hearing.

"It showed little intent to defraud and great intent to resolve the situation with the tax office instead of entering into a bitter battle with the state," the lawyer said.

Crowds of reporters and fans gathered outside the court where first Messi's father Jorge Messi and then the player himself were quizzed on charges of evading tax on the striker's image rights to the tune of €4.16 million.

They have denied wrongdoing, pointing the finger at a former agent of the player.

The court said Jorge Messi paid the tax authorities five million euros in August — the 4.16 million euros claimed by the taxman plus interest — which is likely to significantly reduce any sentence should they be found guilty.

Lionel Messi's form on the field has scarcely been affected, with the Barcelona forward scoring 10 goals in just seven matches this season as the Spanish champions remain unbeaten.

"I am not worried, I'm always on the sidelines of all that, just like my dad. We have our lawyers and our advisors who handle these things. We trust in them and they will solve the issue," he said in July.

Argentina coach Alejandro Sabella also appeared unconcerned Friday, calling up Messi for next month's World Cup qualifiers despite having already secured a place at the 2014 finals.

Neither do Messi's legal problems appear to have tarnished his image among Barcelona fans.

"What I want is for this to be resolved quickly so Messi can relax and focus on the football," said one fan outside the court, Joaquin Bosch, 60, wearing a Barcelona shirt.

The case began in June when a prosecutor accused the Messis of evading tax by ceding the player's image rights to "purely instrumental entities" in Belize and Uruguay.

According to the prosecutor's report, Messi "obtained significant income" from image rights between 2006 and 2009 for which he failed to pay required taxes.

The news caused astonishment in Spain where Messi is seen as a more humble figure than other football stars, particularly his Real Madrid rival Cristiano Ronaldo.

"He has a very professional image, of being focused on what he does and very close to the public," said Carles Canto, a marketing expert for IMG Consulting.

Despite the initial consternation, the player's popularity doesn't appear to have diminished.

"Messi's image amongst Barcelona fans is so solid that it is very difficult for it to be clouded by this case," said Enric Baneres, a sports journalist for Catalan daily La Vanguardia.

"Tax evasion is something so common in Spain, like the siesta or paella, that the people are very permissive with it."

According to a document sent by Messi's father to the court, obtained by Catalan daily El Periodico, his former agent Rodolfo Schinocca was put in charge of organising the "structure and management" of the income from Messi's image rights.

Schinocca told Spanish radio station Cope that he had nothing to do with the case because he stopped working with the Messis in 2006, before the supposed offences took place. He accused Jorge Messi of wanting an offshore account to manage the income from the image rights.

While Messi's 323 goals in 387 games for Barca have made him irreplaceable on the field, his income from endorsements off it has also soared.

Between 2007 and 2009 he earned more than €10.17 million in image rights. US magazine Forbes lists him as the 10th highest paid sportsman in the world with an annual income of $21 million from endorsements alone.

Despite the court case, Messi continues to lead advertising campaigns for brands like Adidas and video games maker EA Sports. Its latest version of the immensely popular FIFA game franchise was released in Spain the day before Messi was due to appear in court with his picture on the front cover.

AFP

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TAX

The taxes in your region of Spain you probably didn’t know existed 

Madrid has just announced it wants to be the first region to scrap regional taxes, but what are these tariffs that apply to specific autonomous communities? And where in Spain do taxpayers pay the most?  

The taxes in your region of Spain you probably didn't know existed 
Which autonomous community in Spain has the most regional taxes? Photo: Javier Carro/Wikipedia

Spain’s 17 autonomous communities, with the exception of the Basque Country and Navarre, all have their own taxes which are applicable to people and companies in their territory. 

Known as impuestos propios (own taxes), these tariffs are applied by regional governments to address matters pertaining to their community which they’re looking to solve. 

On September 1st, Madrid’s regional president Isabel Díaz Ayuso made headlines by announcing she intended to scrap the remaining impuestos propios in the region (tax on slot and arcade machines in bars and restaurants and a tax on the storage of waste), amounting to €3.4 million annually for Madrid taxpayers.

This only accounts for 0.02 percent of taxes paid by the region’s 6.6 million inhabitants, but Ayuso’s announcement had made people across Spain more aware of the existence of these little-known regional taxes in their part of Spain.

Madrid’s leader has argued that some regional taxes are now becoming redundant or obsolete as other tariffs are introduced by Spain’s central government on a national level.

madrid scraps regional taxes impuestos propios

Ayuso has said her government will refuse to adapt its tax system to decisions made by Spain’s central government, especially when it comes to its very low taxes on inheritance and assets. Photo: Javier Soriano/AFP

Spain’s 17 regions are responsible for applying their own autonomous taxes, which depending on what they are, can make life more or less expensive for the average person in Spain depending on their location. 

Regional governments are also responsible for setting tax levels on inheritance and assets, which can vary enormously between territories.

EXPLAINED: How choosing the right region in Spain can save you thousands in inheritance tax

So which region of Spain has the most regional taxes? And what are the impuestos propios that you have to pay in your part of the country?

Catalonia

Catalonia has the most regional taxes of all of Spain’s 17 regions, with 13 impuestos propios adding €137.3 million to public coffers in 2020. 

The latest to be added is the tax on C02 emissions for vehicles, along with other tariffs on large commercial establishments, empty homes, tax on tourism stays, sugary drinks, a tax on luxury goods and several other environmental levies relating to water, waste and emissions. 

Andalucia

Spain’s largest region has the second highest number of regional taxes in the country with eight impuestos, although some of these are currently not applied. 

Taxes on unused land, credit agency customers, single-use plastic bags and a number of other environmental taxes added €145 million in tax revenue to Andalusian authorities in 2020. 

Murcia 

Murcia has six regional taxes in place in 2021: three environmental ones, one on bingo prizes, another on economic activities and a water treatment tax, all of which accounted for €55.9 million in taxes in 2020.

Galicia 

The northwestern region has six autonomous taxes which added €80 million to public coffers last year, including a fee on derelict or abandoned homes and a number of environmental taxes relating to mining, pollution, wind energy and water treatment.

Asturias 

Galicia’s northern neighbour also has six regional tariffs which added €118 million paid to Asturias’s tax office in 2020. They include a tax on bingo prizes, water treatment, unused rural land, large shopping centres, economic activities as well as environmental levies. 

Economists in Asturias are calling for regional authorities to lower levies for inheritance and asset taxes as well as regional taxes, suggesting higher-than-average tariffs are dissuading investors.

Canary Islands 

The Atlantic archipelago has five individual taxes, three of which belong to the Canaries’ unique IGIC tax regime (no VAT): General Indirect Tax, AIEM consumer tax and registration tax. The other regional levies are on tobacco, waste spills and petrol-based products.

Aragón 

Aragón in northeast Spain has five regional taxes, all of them environmental. In 2020 Aragonese authorities collected around €100 million from taxes on water pollution, atmospheric damage, environmental impact of large shopping malls, electricity installation and transport as well as on the use of stored reservoir water.

Extremadura

The western region also has five regional taxes which added €115 million to public coffers last year. Active tariffs in Extremadura are on landfill processes, water treatment and hunting.

Valencia region 

The eastern region has four regional taxes in total: a tax on empty homes for those with more than ten properties, tax on waste processes, activities that have an impact on the environment and water treatment. 

The Valencia region’s tax head Vicent Soler has referred to Ayuso’s words as a “smokescreen” that accounts for an insignificant amount for Madrid taxpayers and that slashing regional taxes “will mean those who need it most get fewer services”. 

The Balearic Islands 

The Balearic Islands also have four regional taxes, of which only two are currently applied: the tax on tourist stays (€36.8 million collected in 2020), which is based on overnight holiday stays on the islands, and the wastewater treatment fee (€78 million collected in 2020).

La Rioja

Spain’s famed wine-producing region has four regional taxes, with which in 2020 it added €12 million to its public coffers. These are a tax on cell towers that have a negative visual impact,  water treatment, waste management and a levy on economic activities.

Cantabria

Cantabrian authorities collected €27 million in 2020 from their regional taxes on water treatment, waste deposit in landfills and a levy on economic activities. 

Castilla-La Mancha

In the central Spanish region there are regional taxes on wind energy and economic activities that have an environmental impact.

Castilla y León

Authorities in Castilla y León have said they don’t plan to follow in Madrid’s footsteps and eliminate its own current environmental taxes, which are mainly paid by electricity companies.

Castilla y León currently receives almost €63 million with its tax on the environmental impact caused by certain uses of stored reservoir water, a tax on wind farms and another on high voltage electric power transmission facilities, as well as a further €7.6 million from landfill waste management taxes.

You can read more about impuestos propios on Spain’s Hacienda website (information in Spanish). 

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