Lionel Messi, one of soccer’s biggest stars, has gotten rich by avoiding tackles on the field -- and taxes off it.
On a recent evening in Mestalla Stadium in Valencia, Spain, Messi scored the first goal for European powerhouse Barcelona with a feint that left the goalie sprawling. The Argentina native added two more goals in the first half, leading his team to victory over Valencia. High in the stands, a radio commentator shouted, “Leo, Leo, Leo Messi: the king of football!”
As athletic royalty, Messi makes an estimated $41 million a year, about half from sponsors. His endorsement income has drawn the attention of Spanish tax authorities.
Messi, 26, the four-time global player of the year, and his father are due in a Barcelona court tomorrow to face a complaint that they evaded 4.2 million euros ($5.7 million) in taxes on payments from Adidas AG, PepsiCo Inc., Procter & Gamble Co. and other companies. According to court documents, the Messis diverted 10 million euros to tax havens Belize and Uruguay from 2007 through 2009.
The government is pursuing the case even after the Messis paid 5 million euros -- the amount prosecutors say they evaded, plus interest -- on Aug. 15. The hearing Friday is to determine whether to charge them with criminal tax evasion. If charged and convicted, they could be fined as much as 21 million euros and given a 1-year suspended prison sentence.
Tackling Evasion
The case against Messi, who holds dual citizenship in Argentina and Spain, is part of an aggressive push by Spain, U.K. and other deficit-ridden governments to tackle tax evasion in Europe’s 19.4 billion-euro soccer industry. After decades of coddling Europe’s most popular -- and politically influential -- sport, authorities are pursuing players and teams that collectively owe billions of euros in unpaid taxes.
The European Union estimates that 1 trillion euros are lost annually to all types of tax avoidance and evasion. Just as European governments are proposing rules to prevent multinational corporations from shifting income to offshore tax havens, they’re also going after top international soccer players. Professional athletes such as Messi employ the same strategies to shelter fortunes, and tap into the same network of wealth managers and advisers, as other global elites.
‘Nasty Regulations’
The Messi case “is definitely a statement of Spain today,” said Alistair Spence Clarke, a British accountant who works in Marbella, Spain. “Spain has introduced some pretty nasty tax avoidance regulations. It’s really becoming very aggressive.”