Costas Del Sopranos
Operation Shovel, the dawn raids in Europe and Brazil that resulted in 33 arrests including that of Christy Kinahan, known
As the “Irish godfather”, had unravelled a significant drug-trafficking, gun-running and money-laundering empire concentrated on the Costa del Sol, where Kinahan’s alleged mafia family was based.
The swoop also revealed Kinahan to be a savvy property investor, with assets worth about ¤500m. This included complexes in Marbella and resorts in Brazil. Before his arrest, John Gilligan, widely believed to have masterminded Veronica Guerin’s murder and who is holed up in Portlaoise prison for drugtrafficking, was often photographed soaking up the Spanish sun. But what makes Puerto Banus, say, more attractive than others for Irish criminals looking to squirrel away their cash? Rules on tax dodging and how well they are enforced are crucial, it seems.
“The laws on targeting tax evaders with properties abroad are clearly defined but they ill serve as a deterrent only to those that seek to break them if they are enforced vigorously,” says Colm Murphy, of Property Tax International, a foreign property tax specialist.
The EU Savings Directive obliges banks within member states to pass information on interest earned by every non-resident account-holder to that person’s tax authority. So an Irish resident with a French bank account has information detailing total interest passed to Revenue each year.
“With this information, Revenue has the ability to cross-reference details entered in the Irish tax return against figures obtained from the overseas bank,” says Murphy.
For people who don’t play by the book, however, countries with a history of slacking on tax transactions can be lucrative places to buy a second home.
“It’s no coincidence that Marbella is popular among criminals when several mayors in a row have been arrested and thrown in jail for corruption and accepting bribes, mostly from property developers,” The illegal construction debacle in Marbella and other parts of Andalucia shows the fallout from corruption on Spain’s costas.
Thousands of Irish and British people who bought or built property there have found that their dream homes in the sun were wrongly issued planning permission. Bulldozers moved in on homes in Almeria and Marbella, while dozens more were earmarked for demolition. But experts expect an amnesty, as Marbella’s town council cannot risk having to pay compensation for demolishing what was deemed legal when planning approval was issued.
Marbella is now cleaning up its act and clamping down on those manipulating the system. Its tax procedures have also improved.
Colm Murphy says: “It would be wrong to assume that Spain is a soft target for tax evaders, because it has implemented a number of deterrents and procedures to combat this. In Spain a centralised system that details and records every property sale is linked to the national tax system. This system identifies every seller and purchaser of property to ensure that the correct taxes are paid at purchase and on the sale.”