Why Shakira is Subject to a Tax Fraud Investigation in Spain

Why Shakira is Subject to a Tax Fraud Investigation in Spain

Popular Musician May Face Tax Fraud Trial in Spain

Shakira Tax Fraud Case in Spain will go to Trial: In Spain, a Judge has determined that Prosecutors there have brought sufficient evidence necessary to move onto the trial phase for tax fraud against global singer and entertainer “Shakira.” The government claims Shakira may have circumvented more than $17M USD in tax liabilities. The crux of the argument is that Shakira did in fact reside in Spain for a sufficient time for her to be subject to Spanish income tax on more than just Spanish-sourced income (which is how non-residents in Spain are taxed). Let’s take a look at the Tax Fraud Cause against Shakira for tax years 2012-2014.

Worldwide Income Tax Model

Unlike the United States that taxes US Persons (US Citizens, Lawful Permanent Residents and Foreign Nationals who meet the Substantial Presence Test) on their worldwide income, most countries have a different tax system. Instead of the United States and a CBT tax model (Citizenship-Based-Taxation), most countries follow RBT or Residence-Based-Taxation. With RBT, Taxpayers are generally only taxed on their global income when they qualify as a resident of that country.

Was Shakira a Resident of Spain in 2012-2014?

Spanish Prosecutors claim Shakira resided in Spain between 2012 -2014, but Shakira claims she was not a Spanish resident until 2015. If she was a resident in 2012-2014, the Government will use that to claim she owes taxes for those years —

As provided by APNews:

        • BARCELONA, Spain (AP) — A Spanish judge investigating alleged tax fraud by Colombian musician Shakira recommended on Thursday that the case go to trial after concluding there is evidence that the pop star could have avoided her fiscal obligations to the state.

        • Judge Marco Juberías wrote that his three-year probe found there existed “sufficient evidence of criminality” for the case to go to a trial judge.

        • The decision can be appealed.

        • Prosecutors charged the singer in December 2019 with not paying 14.5 million euros ($16.4 million) in taxes in Spain between 2012 and 2014, when she lived mostly in the country despite having an official residence in Panama.

        • Shakira, 44, denied any wrongdoing when she testified in June 2019. Her public relations firm said that she had immediately paid what she owed once she was informed of the debt by the Tax Office.

        • Shakira faces a possible fine and even possible jail time if found guilty of tax evasion. However, a judge can waive prison time for first-time offenders if they are sentenced to less than two years behind bars.

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