Robert J. Fedor, Esq., L.L.C.

Governments take action to shut down foreign tax loopholes and shelters

Many people, particularly those with considerable amounts of wealth, rely upon the expertise of financial advisors and tax professionals when figuring out how to make and retain money. In years past, many Americans and citizens of other countries took advantage of potential tax shelters and loopholes associated with foreign accounts. Today, with the enaction of FATCA, the U.S. has largely cracked down on these practices. However, other methods to secure assets and possibly avoid paying taxes still exist.

One such option includes the role of nominees in the ownership of companies. A nominee is an individual who acts as a conduit for a company's real owners who wish to remain anonymous. For years, nominees have carried out various financial actions on behalf of company owners. However, a recent case involving international soccer super star Lionel Messi, indicates governments are also cracking down on the anonymous ownership of companies and business entities.

Spanish-born Messi and his father are currently facing criminal charges related to allegations the two used companies they secretly owned in Belize and Uruguay to hide assets and avoid paying taxes. For his part, Messi has denied any criminal wrongdoing and insisted he knew nothing about the companies or the assets being funneled through them.

By all accounts Messi, who annually earns $50 million, is likely telling the truth. It's probable that the illegal actions were carried out by others including his father and financial advisors. The Spanish authorities, however, contend that ignorance of financial dealings is not sufficient in absolving one of responsibility for illegal actions. Additionally, even if Messi did not know of the secret companies, it's likely his signature is present on key and incriminating documents.

In recent years, countries around the world have taken steps to pass laws requiring more transparency of citizens with regard to financial dealings. The Messi case is just one example of how serious governments and the courts take tax evasion cases.

Source: Forbes, "Lionel Messi Loses Appeal, Criminal Tax Case Heads Toward Trial," Robert W. Wood, Oct. 3, 2014

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