Soccer Star Lionel Messi: A Tax Mess or Example?
by Terri Eyden on
By Teresa Ambord
UPDATE: El Periodico, a Spanish publication, reports that in spite of protesting the government's claims, Lionel Messi and his father, Jorge Horacio Messi, have paid an enormous sum in additional back taxes and will not face tax charges.
Messi's defense team continues to maintain the innocence of their clients but advised the men to settle. Forbes reports the advisors told Messi he "could potentially settle his alleged tax-fraud case out of courts."
When the story broke, the Messis said they had paid everything they owed. Now the father and son have agreed to pay the equivalent of $19,546,500 toward the government's claims against them. This is after having already paid $13,031,000 to the Spanish Treasury for income reported for 2010 and 2011. Another payment is expected to be made by June 30, bringing the total amount they will pay into the Spanish Treasury $39,093,000.
Lionel Messi was scheduled to appear in court on September 17. If convicted, he could have faced up to five years in prison and a fine of up to $31,274,400. Messi is ranked tenth on Forbes list of the highest-paid athletes. His estimated earnings through June 2013 are $41,000,000. He's under contract until 2018 for at least $20,000,000 annually.
By Teresa Ambord
In soccer, he's the World Player of the Year. Forbes magazine calls him the "best soccer player in the world," with a squeaky clean, good-guy reputation. But lately, the Spanish tax authorities have turned the hot glare of suspicion on Lionel Messi, along with his manager/agent father, Jorge Horacio Messi. What started as a minor scandal has exploded in the media, with the authorities accusing the two men of tax evasion amounting to more than $5.3 million in US currency.
Here's the story
Forbes lists Messi as the tenth highest paid athlete in the world. His soccer salary exceeds $20 million per season. But for endorsements, he's paid another $21 million or so from such giants as PepsiCo, Adidas, and Proctor & Gamble. He also sold his image in 2008 to the Aspire Academy in Qatar and received endorsement income during a trip to Uzbekistan the same year.
Now the Spanish prosecutor's office says Messi and his father hid the income he was paid for the use of his image (earned in 2006 through 2009) from the Spanish tax authorities by establishing companies in areas believed to be tax havens.
Some European publications estimate the pair could be looking at four years in prison each if convicted. But the UK Guardian says the penalty could be as high as six years in prison each, plus a fine of up to six times the amount of the tax the men are accused of evading.
Messi's team members and many fans believe the soccer star and his father and they stand by him. According to the Guardian, they also have the support of Barcelona's president, Sandro Rosell, who states publicly the men are innocent. Backers describe Lionel Messi as a down-to-earth man with a good reputation. Unlike many highly paid athletes, who develop the swagger and often the personal problems which come with fame, they say Messi is a regular guy with a normal family life. He's also involved in numerous charities and recently served as a Goodwill Ambassador for UNICEF.
Then there are the naysayers . . .
Fair or not, not everyone is in Messi's corner. Critics in the press have pounced on him with both feet. Marca, a Madrid publication, wrote, "He cannot forget that he must play clean in the sport as in life," and referred to Messi as "a symbol under suspicion." Marca and other major news outlets in Spain are predicting a fall, replete with dire consequences for Messi.
Spain's Education and Culture Minister told Forbes, "Naturally the law is the same for all, even for the number one."
Still, others believe Messi and his father are being set up and are victims of "prosecutorial zealousness," says Forbes. In a country where the economy has been in the tank for a while, people are suffering from financial fatigue, and some wonder if the authorities are taking their frustration out on wealthy taxpayers like the Messis.
Spain is, after all, one of five Euro countries that have required a bailout since 2010. Like so many parts of the world, Spain has been hit with a housing bust and a global slowdown. A Forbes article speculates Spain may have worsened its economic problems with bad decisions, such as giving tax breaks to foreign residents, which resulted in an enormous revenue leak.
Meanwhile, amidst all the mudslinging and the suspicion, Messi and his father say they relied on the guidance of his tax advisors and paid all the taxes due. He says he was "blindsided" by the allegations and only learned about the charges through the press.
Stay tuned to find out the fate of this well-respected soccer player. A long jail term may make an example of him, whether he's guilty or not, and it will also likely kill a golden tax goose Spain can't afford to lose.
Read more celebrity news stories.
You may like these other stories...
As mentioned in today’s “Bramwell’s Lunch Beat” via an article from the USA Today, a new report from the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS doled out $2.8...
London Stock Exchange switches auditing to EYThe London Stock Exchange will drop PwC as its auditor and replace it with EY after completion of the audit for the year ending March 2014, Harriet Agnew of the Financial Times...
With tax season in the past, it's time to think about the tax implications of decisions your clients may be making about their homes in 2014. The rules are complicated and because of the huge amounts involved, the...
Upcoming CPE Webinars
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.