Shakira’s tax evasion in Malta: Spanish prosecutors demand jail time, €24m fine

Spanish prosecutors are asking the Barcelona courts to sentence Colombian singer Shakira to a prison term of eight years and two months, as well as a fine of €23.8 million.

They have accused her of evading the Spanish taxman through a “corporate framework” in which her Maltese company played a central role.

After being charged in 2019, a Barcelona judge agreed on Tuesday to open a trial against the singer where she will be accused of €14.5 million in tax fraud between 2012 and 2014, years in which Shakira claims she did not live in Spain and, as such, was not eligible to pay Spanish taxes on her massive income.

Shakira is reported to have already paid the arrears, plus another €3 million in interest, but that was not enough to get prosecutors off her back.

They argue the singer lived in Spain “regularly” between 2012 and 2014 – in Barcelona and then in a mansion she bought with her former husband, Barcelona FC player Gerard Piqué, in Esplugues de Llobregat through a company.

Spanish prosecutors contend the property was Shakira’s family home and that she only left Spain in that period “for professional reasons and very short durations”.

Prosecutors are arguing that since she resided in Spain for more than 183 days a year, a legal tax year, Shakira “was a tax resident in Spain and was obliged to pay taxes on all of her worldwide income” concerning both income tax and wealth taxes.

They argue that to avoid doing so, Shakira set up a “corporate framework” based in Malta, the British Virgin Islands, Cayman Islands, Panama and Luxembourg, where she hid income and assets.

https://theshiftnews.com/2022/08/13/how-shakira-used-malta-companies-to-avoid-high-tax-jurisdictions/

Loosely speaking, Shakira’s companies in those countries would formally appear as the holders of her income. In those countries, she would pay extremely low tax rates, such as 5% in Malta because of its corporate-friendly tax imputation system, and in Luxembourg with its ‘Tax Rulings’ granted to companies that see them pay some 2% of gross income generated.

Shakira, however, appears to be standing her ground.  Her legal team has reportedly attempted to reach an out-of-court settlement, but she has rejected all offers tabled.

But central to the issue is the company the Colombian singer, Shakira Isabel Mebarak Ripoll, set up in Malta. The documents released in the Paradise Papers in 2017 – a copy of the Malta Business Registry documents – showed how she had relocated her intellectual property rights and brands to a company based in Malta in 2009.

The company, Tournesol Limited, was registered in Malta on 27 December 2007. The company holdds the rights to her musical assets, amounting to a value of some €32 million. The company’s authorised share capital is €3.02 million.  Tournesol, in turn, owns a Luxemburg-based firm named ACE Entertainment.

A search of the Malta Business Registry shows Shakira is still 100% owner of the company, and her listed residence address is the home in Esplugues de Llobregat, outside of Barcelona.

Shakira claims to have officially switched her country of residence from the Bahamas to Spain in 2015, the year after the dates being questioned by the Spanish tax authorities.