Foreign investment tax avoiders who setup shell companies arrested

The Guardia Civil and the State Tax Administration Agency (AEAT), within the framework of the “Isla Sorna” operation carried out in Tenerife, have arrested four people, of Russian and Spanish nationality, who evaded their tax and fiscal obligations.

They are attributed the crimes of money laundering, crimes against the Public Treasury, unfair administration, false documents and identity theft. These people used tax-accounting engineering, foreign investment companies and funds, shell companies and trust offices to finance themselves with funds originating in Russia that they sent to Tenerife through tax havens and territories with zero taxation, avoiding all fiscal responsibility and tax.

This investigation began at the beginning of 2018 when the Guardia Civil detected that a Spanish company had previously been financing itself through private loans granted by citizens of Russian origin. Previously, a few months earlier, this company had bought the land of an old nightclub located in Tenerife in order to convert it into a luxury shopping centre.

Use of tax havens and zero-tax territories

The joint development of the investigation carried out by the Guardia Civil and the State Tax Administration Agency (AEAT) revealed that this Spanish company, in order to start its reconversion project, had to resort to investment funds and foreign companies, with capital from Russia and money of dubious origin in order to obtain the necessary financing. To do this, they resorted to sources of financing through nationalised companies in Australia, Luxembourg and the British Virgin Islands, the latter place where one of the lending companies was linked to a trusteeship, associated with a multitude of “vehicular”-type front companies”.

Through the use of these shell companies, they would have obtained mortgage loans for amounts greater than 23 million euro, some of them with interest of up to 25%.

In turn, the economic analysis carried out to date has been able to determine the use of a circuit for the introduction of funds in Spain, specifically in Tenerife, compatible with the phases of money laundering in accordance with the criteria established by the Commission for the Prevention of Money laundering. Thanks to the practice of a “fiscal engineering” system, they were able to later develop these operations, with the aim of ultimately avoiding the payment of taxes to the tax administration.

With this investigation, of an economic-financial and fiscal nature, it has been possible to clarify a business network that for years would have eluded all fiscal and tax responsibility to the detriment of the Public Treasury.

Exploitation phase of the Isla Sorna operation

In total, six searches have been carried out, four of them in the homes of those investigated and two in commercial companies in Tenerife, intervening numerous documents of an economic nature (mainly accounting and billing), cash, as well as telephone, computer and electronic devices.

In addition, by the Court that directs the investigation, the preventive annotation of blocking and disposition of movable and immovable property was agreed, for an approximate total amount of 45 million euro, to guarantee possible civil and pecuniary responsibilities.

The operation has been developed jointly by the Information Group of the Guardia Civil Command of Santa Cruz de Tenerife and the State Tax Administration Agency (AEAT), having been directed by the Investigating Court no. 3 of Arona in coordination with the Anticorruption Prosecutor of Santa Cruz de Tenerife.