Lionel Messi Used U.K. Company in Tax Fraud, Prosecutor Says

Lionel Messi, the four-time world soccer player of the year, directed revenue from advertising deals through companies in the U.K. and Switzerland to evade 4.2 million euros ($5.6 million) in income tax, according to a complaint filed by a prosecutor in Barcelona.

Messi and his father Jorge routed earnings through London-based Sidefloor Ltd. and Tubal Soccer Management GmbH in Zug between 2007 and 2009 because the U.K. and Switzerland have treaties with tax havens and allow the existence of companies with “opaque” ownership structures, prosecutor Raquel Amado said in a 13-page complaint.

The 25-year-old Messi, an Argentine who’s played for Barcelona since 2003, denied wrongdoing in a post on his Facebook page.

“It’s something that we are surprised about because we have never committed any infraction,” Messi said. “We have always fulfilled our tax obligations following the advice of our tax consultants who will take care of clarifying this situation.”

After 5 to 8 percent commission on Messi’s revenue from companies including Adidas AG, PepsiCo Inc. and Danone SA was retained by Sidefloor and Tubal Soccer, the income was redirected to Jenbril SA in Uruguay, which is “technically a tax haven,” according to the complaint. Messi also redirected income to Belize, the complaint said.

Adidas Contract

Messi’s contract with Adidas to endorse the sport apparel maker was worth 7.5 million euros, not counting bonuses, in 2007, according to the complaint, without saying for how many years it was scheduled to run. Messi was soccer’s best-paid player after David Beckham last year with 35 million euros of salary and endorsements, according to France Football magazine. Beckham, 38, quit pro soccer in May.

Messi routed a total of 10.2 million euros offshore from 2007 to 2009, with about one-third of that coming from Barcelona, the complaint said. Spain’s tax agency allows foreign soccer players to receive 15 percent of their team salary abroad in image rights, according to Rodrigo Garcia, a lawyer at Laffer Abogados whose clients include soccer players.

A judge in the Gava district of Barcelona where Messi lives will hear witness statements from the player and his father before deciding whether to charge them or drop the case, Jose Miguel Company, a spokesman for the public prosecutor’s office in Barcelona, said by phone.

The judge’s investigation could take between one and two years, according to Company. Messi could avoid all punishment if he pays the money that the public prosecutor said he owes in unpaid taxes, Company added.

Hide Ownership

Sidefloor paid 161,947 euros tax in the U.K. on revenue of

17.4 million euros for the year to Feb. 29, 2012, according to a filing at Companies House.

It’s common for foreign companies to route revenue to tax havens via the U.K. because it’s “easy” to set up a company, hide ownership and pay relatively little withholding tax, Richard Murphy, author of “Over Here and Undertaxed,” a book about tax avoidance by Google Inc. and other corporations in the U.K., said by telephone.

Sidefloor is controlled by Bedford Nominees (UK) Ltd. and doesn’t mention Messi in its annual accounts or ownership structure, according to Companies House filings. Bedford’s parent company is West England Trust Ltd., a financial planning company, according to the complaint.

Filings for Zug-based Tubal Soccer couldn’t immediately be obtained. The effective average corporate tax rate in the Swiss canton, a hub for commodity trading, was 13 percent in 2011.

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