14 Apr, 2016 @ 09:15
1 min read

Offshore companies and the Panama Papers

Antonio Flores
Antonio Flores
Antonio Flores

FOLLOWING the publication of what appears to be a massive 11.5 million leaked documents from a Panama law firm, Mossack Fonseca, this small Central American territory will no longer be remembered for its canal or for being the country that the U.S. invaded in 1989.

For the record, It must be said that in most modern jurisdictions it is not illegal to either have an offshore bank account, an offshore company, or both. What is against the law is to be a resident of a (tax-wise) ‘normal’ country where one pays taxes regularly, and to have money, interests, shares or any other valuables hidden in an offshore jurisdiction or under the mattress.

In Spain alone, according to the 2015 Tax Control Plan by the AEAT (Spanish Tax Office), 7,000 taxpayers are already under investigation by the Tax Agency either for not presenting form 720 when they should have done, or for not declaring their foreign assets correctly. With the Panama Papers scandal, this number will certainly double.

As far as Spain is concerned, it is interesting to note that offshore companies do provide a significant degree of anonymity. In fact, offenders have generally been caught as a result of tip-offs, police raids on law firms during fraud investigations or through massive document leaks  – such as the Panama Papers. Unfortunately for many of those caught, tax evasion can lead to charges of money laundering, as these are connected crimes.

Fans of offshore banking, often in places with appealing names such as Belize, Cayman or Seychelles, need to accept once and for all that responsible fiscal planning has nothing to do with fictitious residencies and other forms of concealment.

One can have millions stashed away via a Turks and Caicos company, a boat in the name of a Madeira-registered entity and the villa via a Gibraltar offshore service, provided they are properly declared in the country of residence. And there is no tailored or ‘bespoke’ tax advice or planning that will alter this obligation.

Antonio Flores (Columnist)

Lawyer Antonio Flores is the legal columnist for the Olive Press. Antonio has been practising law since 1997, year in which he began working for a large law firm in Marbella as a Property Lawyer. In 1998 he left the company he had joined a few months earlier, and used his knowledge and the experience gained to build his own practice. He is known throughout the community as independent, reputable and trustworthy. Through a combination of strong work ethics, determination and international exposure, his competence of Spanish Law is unparalleled and demonstrated through his fluency in English and Spanish.


  1. Offshore banking will always have a stink about it, no matter what justifications are offered in favour of it. If a big stasher has nothing to hide, home banking would, in most people’s minds, be the preferred option. “But it’s legal” they wail. Yes, but is it moral? No? then make it illegal.

  2. Well all I can say is, that if it’s morality one is talking about why not start with the morality of making genuinely purchased property that had all the trappings of being legal and where innocent people had sunk their live saving into thinking all was legal using solicitors etc being made legal first. Let Spain start with a clean slate first before attacking legal investments and if those legal investments can get one over the Spanish government the best of luck to them. Lots of double standing’s going on here.
    In saying that I hope every expat that is resident in Spain had completed their 720 form regardless whether they feel it did not effect them, but the Spanish tax law has indicated numerous time that everyone must complete the form, either your income is taxable or not, at least one can sleep soundly at night.

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