Global contractor compliance updates

Global contractor compliance updates

Dec 14, 2023

Workwell-International News

In our latest roundup of global contractor compliance news, we review stories from recent weeks highlighting that seniority, wealth and status make no difference when it comes to remaining compliant with international tax legislation.

Billionaire art dealer faces jail and €250 million fine in tax fraud trial

The first of our stories concerns Franco-American billionaire art dealer Guy Wildenstein, who is accused of hiding his fortune in art, property, racehorses and other assets in an attempt to conceal the true scale of his earnings from French tax authorities. Wildenstein is facing his third trial for tax evasion and money laundering with prosecutors labelling his case as ‘the longest and most sophisticated tax fraud’ in modern French history. The majority of his wealth is alleged to have been hidden within a labyrinth of offshore trusts that held works by artists including Monet, Rembrandt, Caravaggio and Picasso, along with a number of other assets. Wildenstein and his family are accused of avoiding French inheritance taxes that were due following the death of his father in 2001. The domestic authorities in France rejected the defence that the family had no tax liability for assets controlled by independent trusts that were founded by earlier generations of the Wildensteins. Monica d’Onofrio, one of two prosecutors, said, “Guy Wildenstein did not want to be aware of what was going on but he was. He was omnipresent.” D’Onofrio also suggested that the family ‘dipped into the assets like their piggy banks’ and that the family motto was ‘to say nothing and reveal nothing’ in order to maintain its empire.” This isn’t the first time the family has faced trial – in 2017 and 2018 the Cour de Cassation, the highest appeal court in France, rejected their acquittals with the judge revealing that there had been a “clear intention” by the family to hide its wealth but French law did not have jurisdiction over US-style trust funds. The court rejected that argument which led to the third trial taking place. The legal saga commenced in 2003 when their father’s widow Sylvia Wildenstein, accused his two sons, Guy and Alec, of cheating her out of her share of his estate. She fought, with her lawyer, until her 2010 death to recover her inheritance, which led to the unearthing the family’s web of trust funds, shell corporations and undeclared artworks.

 

LVMH boss Bernard Arnault under investigation in Paris over Russian transactions

The French authorities are also investigating the affairs of another French Billionaire, this time LVMH CEO Bernard Arnault regarding his financial transactions with Russian oligarch, Nikolai Sarkisov. Le Monde reported that Sarkisov had bought an Alpine resort with the assistance of a loan from Arnault, with authorities suggesting the move was ‘likely to characterise acts of money laundering’. The Tracfin financial intelligence unit has declined to make any further comments and Arnault has insisted that the deal was carried out legally. This isn’t the first time that the LVMH CEO and one of the world’s richest men has been under investigation; earlier this year he lost a high court case over a 2019 raid on his company headquarters that was linked to a tax fraud probe connected to his activities in Belgium. Sarkisov’s organisation RESO-Garantia, has said that neither he nor the company had not been involved in the purchase and that the two powerful individuals had never met. Via a statement, they suggested that ‘all transactions were carried out by French companies, through French notaries by French lawyers on all sides. This was a usual real estate deal.” LVMH has also refuted all allegations, however, the fact that Arnault and Guy Wildenstein are being investigated highlights that no organisation or individual suspected of breaking tax regulations is safe from the reach of authorities, regardless of their wealth or power status.

 

The first set of measures to reduce tax evasion by freelancers to be submitted to Greek Parliament

Our final story for this week comes from Greece where the first set of measures designed to reduce tax evasion are to be submitted to Parliament later this month, with a second batch following in November. The proposals are specifically designed to target freelance and contract workers who have been accused of evading taxes. Greek National Economy and Finance Minister Kostis Hatzidakis commented, “The system we will adopt will lead those who evade taxes today – because they do not pay their taxes – to pay more not because the tax rates will increase, but because there will be a system.” According to data released by Greek authorities, six out of every ten professionals operating in the country declare income below €10,000 per annum, which has alerted their attention. The first set of measures includes the completion of the cash register-POS interconnection; making electronic invoices mandatory; completion of the MyDATA process; making possession of an electronic payment system by retailers mandatory; activation of a digital consignment note, on a pilot basis at the beginning of 2024 and in full by the end of the year; establishment of payment of welfare benefits through bank cards; and listing smuggling offenders so that they have no chance of working with other companies. If you operate in Greece, it’s certainly worth monitoring this case closely as legislative changes could have a significant impact on a contractor’s ability to remain compliant with domestic regulations here in the future.

With the world of tax legislation changing at a rapid rate as governments look to recoup earnings lost to evasion and fraud, contractors face greater levels of risk than ever before when operating overseas. If you’re in any doubt about your ability to navigate this complex world, then speak to our expert team rather than landing yourself in a world of trouble.

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