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Lionel Messi and Cristiano Ronaldo are arguably the best soccer players in the world. Their performance in the recently concluded FIFA World Cup was highly viewed as well as highly scrutinized by the critics. Their fans often argue and even fight over who is better than the other. Their supremacy over the soccer field is unparalleled as both are amongst the highest paid athletes in the world. Cristiano Ronaldo beats Lionel Messi by a slight margin in this regard.
However, there is another eerie similarity between Lionel Messi and Cristiano Ronaldo, they are both convicted criminals! This might come as a shock for many soccer fans. However, this is true. Lionel Messi and his father Jorge were sentenced to 21 months in prison by the Spanish authorities. The same is the case with Cristiano Ronaldo who has been sentenced to 24 months in prison. Both athletes have been ordered to pay fines running into millions of Euros along with the imprisonment. Both star athletes have been convicted of the same crime, i.e., tax evasion. However, since Spain considers probation to be equivalent to imprisonment, none of them have had to spend time behind bars.
In this article, we will have a closer look at some of the taxation scandals that have rocked the lives of start players such as Cristiano Ronaldo and Lionel Messi.
Players like Messi and Ronaldo receive a significant amount of money from their respective clubs in the form of compensation for image rights. This is because the clubs monetize their image by selling merchandise in their names because of their superior performance. These fees add up to a significant amount and run to the tune of millions of Euros per year.
Both Ronaldo and Messi used offshore shell companies to receive these amounts from their respective clubs. It was no surprise that these shell companies were located in tax havens which tend to give favorable tax treatment to the rich.
Ronaldo and Messi then filed their tax returns without stating the income received from image rights. In their opinion, since this income was not earned in Spain, there was no reason to state the same to the Spanish authorities. The Spanish authorities had a different stand. They believed that Ronaldo and Messi each defrauded the government by around 14 million Euros.
The use of tax havens in order to receive incomes is not really a technique that Messi and Ronaldo invented. This is done by several large corporations, and they don’t seem to receive prison sentences! In fact, not planning taxes by structuring the business in a proper way is akin to throwing money away. Then why is it that Messi and Ronaldo were convicted of tax fraud:
Misstatement: The criminal convictions related to tax frauds have started happening now. In reality, many footballers have been using shell companies to dodge Spanish tax authorities for a long time. The problem in the case of Ronaldo and Messi is that they did not disclose that they were earning a certain amount of money in image rights overseas. Ronaldo, for instance, stated only 10% of his image rights as income in Spain. This is because he was getting paid by global companies such as Nike, Adidas, Coca-Cola, Castrol, and Herbalife. Ronaldo’s defense was that since these companies are global in nature and the payment has been made outside Spanish borders, there is no reason for him to state this income in Spain.
However, the tax authorities in Spain seemed to have a different opinion about the percentage of income that was being earned in Spain. This is where the football superstar faced prosecution and was finally convicted of tax fraud. The same has been the case with Lionel Messi. In his case, the prosecutors had a few more points to add. They are listed below.
Opaqueness: The Spanish prosecutors added that Lionel Messi’s transactions were structured like a money laundering transaction. If the money was to be spent to a particular destination, it was not routed directly. In fact, a web of shell companies and fictitious transactions was used to obscure the trail of the money that was being sent. The Spanish prosecutors came down heavily on this fact. They were of the opinion that Messi was aware of the illegalities of his activities. Why else, would he bear incorporation expenses and set up companies to do fictitious transactions. The opaqueness of the transactions was used as proof against Lionel Messi.
Ignorance: Lionel Messi claimed ignorance about the deals. He was of the opinion that his finances were being managed by his father, Jorge Horacio Messi. He stated that he was only worried about playing football and did not pay much attention to financial matters. His counsel pleaded that his only fault was that he was signing complicated papers without truly understanding what they meant. However, the Spanish prosecutors did not agree. They were of the opinion that a person who has an income as large as Messi has a moral obligation to be aware of where the funds are being routed.
To sum it up, Ronaldo and Messi have been able to dodge many defenders in the football world. However, they could not dodge Spain’s tax authorities. The criminal conviction has negatively affected the image of these great players. It has also served as a precedent for other highly paid athletes in Spain and other European countries.
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