Lionel Messi, who was found guilty of tax fraud back in 2016, has lost his appeal before Spain’s Supreme Court to reverse those charges.
The country’s Supreme Court ruled this week that the Argentine and Barcelona football star’s 21-month prison sentence would remain untouched.
However, it’s quite certain that Messi will not have to serve time considering that first sentences below two years of prison time are generally served under probation in Spain.
During Wednesday’s decision, the Supreme Court said in a statement, Messi “unequivocally understood his obligation to pay tax on income obtained from exploiting his image rights...therefore it is not logical that he should ignore his duty to pay tax on them."
Back in 2016, the local court found the footballer and his father guilty of failing to pay 4.1 million Euros in taxes to the Spanish tax authorities, using shell companies in the UK, Switzerland, Uruguay and Belize to hide income made from the use of Messi’s image rights.
This 2016 decision also imposed a hefty fine on both Messi (about 2 million Euros) and his father Jorge Horacio Messi (1.5 million Euros, subsequently dropped to 1.3 million Euros).
Messi claimed that he was innocent, alleging that he wasn’t aware of what he was being asked to do.
During the initial trial, Messi testified, "I was playing football. I had no idea about anything," and that he “trusted my dad and my lawyers."
More specifically, according to Robert W. Wood who writes a tax column for Forbes, the Barcelona superstar “said that he signed many documents without reading their contents. In some cases, he even acknowledged that he took steps he didn't understand, such as visiting a notary's office to set up a company to handle his finances, without understanding the content or nature of what was being done.”
Experts Speak Out on Messi’s Tax Problems
Speaking about footballers and their tax obligations, Miles Dean, Partner at Milestone International Tax Consultants, said, “There is no doubt that a player such as Messi has extremely valuable image rights and that it is possible to structure their exploitation in a tax efficient manner.”
“However, one might argue that he earns so much from his Barcelona salary that there is no need to go to the lengths that he and his father did to deprive the tax authorities,” Dean said.
“Lest we forget that Spain is bankrupt and the rule of law isn't adhered to in the same was as say the UK - one could equally argue that he's been made an example of.”
“The lesson here is not to risk pushing boundaries and to always seek professional advice,” Dean concluded.
Additionally, writes Wood in Forbes, “as observers try to learn from their mistakes, accountability and transparency are likely to be universal lessons. If you don't understand, ask. If something is being covered up, ask why. If there is a good reason to hide ownership from the public, at least make very sure that the ownership is not hidden from the government.”
Furthermore, in an op-ed for El Periodico, Joan J. Queralt, a Law Professor at the University of Barcelona, agrees with this overall sentiment.
Queralt writes that “affirming that one does not know that one has to pay taxes on a very lucrative activity—in this case, image rights—goes against the most basic logic…Paying taxes is one of the most fundamental of civic duties. Resorting to advisors who encourage a zero tax costs is an indication of the willingness to evade this legal and essential duty to help sustain public expenses.”
All translations from Spanish are the author’s.