The world knows Shakira as the Columbian singer celebrated as the Queen of Latin Music. She’s had international #1 singles, selling millions of records to become one of the most successful Latin artists of all time. But recently, the artist who has won multiple Grammys, MTV, and Billboard awards, Guinness World Records, and even a star on the Hollywood Walk of Fame has made headlines for troubling reasons.
On June 6th, 2019, Shakira appeared in a Spanish court to answer charges of failure to pay taxes amounting to over $16 million for income she earned between 2012 and 2014. When she was charged with tax fraud, her defense claimed she did not live in Spain until 2015 and had met her tax obligations.
In 2011, Shakira claimed residency in the Bahamas after buying her own island, naming it Bonds Cay. The island spans 550 acres and boasts five beaches and three saltwater ponds. However, due to Shakira’s busy concert and television schedule, she traveled extensively. In 2011, Shakira began a relationship with Gerard Piqué, a Spanish center back for the Futbol Club Barcelona and the Spanish national team.
Shakira would give birth to the couple’s first son in Barcelona in 2013 and their second son in 2015. While Shakira did not officially change her residency status from the Bahamas to Spain until 2015, the prosecutors alleged that she was already living in Spain for most of the time between 2012 and 2014. The court also challenged that she only listed the Bahamas as her official residence for tax purposes.
Case study: IRS Raids Business and Packs Up Physical AssetsThe IRS showed up unannounced at our taxpayer’s restaurant with a moving van and instructed all of the patrons eating breakfast to leave. The IRS then began putting the tables, chairs and booths into the moving truck. Our taxpayer called tax attorney Patrick Sheehan who spoke to the IRS Revenue Officer in charge. Because the Revenue Officer had worked with Mr. Sheehan in the past, Mr. Sheehan was able to persuade the IRS to halt the seizure until Mr. Sheehan could make a proposal on behalf of the taxpayer. Mr. Sheehan was subsequently able to negotiate an excellent resolution for this taxpayer and avoided the seizure of the taxpayer’s business.
Shakira’s team had to prove that she was not a tax resident of Spain, having spent less than 184 days there. According to the 183-day rule determining tax residency, a person spending 183 days and more in a single country becomes a tax resident of that country and becomes obligated to pay taxes. However, the Spanish government considers Shakira a resident due to her “vital interests” in the country, including her Spanish partner and two children born in Barcelona.
The prosecutors and investigators involved in Shakira’s tax fraud case would spend the next few years gathering evidence proving her Barcelona residency and obligation to pay income taxes. The tax authorities also investigated her 14 companies, suggesting she was using her businesses to hide her millions and evade taxes on both her income and assets.
Over the 2012-2014 period in question, Shakira allegedly profited more than $40 million and failed to pay over $16 million in taxes. In 2018, the Spanish newspaper El Periodico reported that Shakira had paid about $25 million in back taxes to settle a debt that the government alleges she owes. However, the investigations continue as more allegations of defrauding taxes come to light, as that amount only covered back taxes for only one of the years in question.
When called by the Spanish court in 2019 to appear for six charges of tax fraud, the judge specifically ordered her to use the front entrance. However, to avoid the press, Shakira would slip in through the side door. Her team even had someone disguised to resemble Shakira to distract the media.
To date, Shakira denies any wrongdoing, and her team continues to work to prove she has met all her tax obligations. However, with the case ongoing and more evidence being gathered, Shakira could pay hefty fines and face a possible jail sentence if convicted.
If you want to read more about celebrity tax evasion stories or need advice from a tax resolution specialist, contact Golden Tax Relief today!