A trend in Northern Europe is that tax authorities scrutinize tax structures once assumed to be legal. The Panama Papers, Lux Leaks and various tax authorities receiving lists with undeclared bank account information of tax havens, stimulate a public debate. The case of the government of Belgium against Jeroen Piquer and Optima Bank, is such an example.
The Court in Gent convicted Jeroen Piqueur on the 19th of May 2017 to four months imprisonment, a fine of 1.5 million Euro and the prohibition to manage and/or control a business for the coming three years. The case against the bank itself and the alleged malversations and facilitation of tax evasion are not included in the personal verdict. Depending on the outcome of the case against Optima Bank, where Piqueur was CEO, directors’ liability can result in further imprisonment.
Piqueur used companies registered in the BVI and Liechtenstein, with (offshore) bank accounts in Luxemburg and Monaco to avoid taxes. The case has similarities with the conviction of the Wyly brothers from Dallas (USA) who committed large scale tax fraud and misused international loopholes in a clumsy way. Piqueur failed to declare his beneficial ownership in the entities while hiding behind nominees. The liquidation bonus received from liquidating one of the offshore entities had to be declared as well. In contrast of declaring the liquidation bonus, Piqueur bought Rubeccan, a nearly 140 ft Superyacht.
Large scale tax fraud is often the combination of lack of full knowledge and following the advice of generalistic advisors. The big accountancy firms are sometimes successfully appealed when the tax structure is not legitimate and the tax authorities reject the business fundamentals of the transactions that go offshore. The small business owner must pay close attention to avoid being part of a similar scandal.
The case against Piqueur demonstrates the thin lines between tax avoidance and tax evasion. Not following the international and cross border rules, especially in the country of personal domiciliation, provides tax authorities with far-reaching powers. Small business owners who use international tax planning to avoid paying high taxes in their country of residence, should take into consideration that owning an entity in a tax haven does not always exclude them from disclosing this beneficial ownership to their local authorities.