Explained | Shakira settles Spanish tax fraud case! Here's what you may know or not know

Globally acclaimed Colombian singer and songwriter Shakira, whose full name is Shakira Isabel Mebarak Ripoll, has reached a deal with Spanish prosecutors to settle a tax fraud case, just as the trial was about to start. The singer has now agreed to pay a fine of €7.3 million ($8 million). However, the prosecutors were previously seeking an 8-year jail term or a fine of €23.8 million if found guilty.

In December 2018, Spanish prosecutors dropped a bombshell, accusing the global superstar of tax evasion.

What was the claim?  

The prosecutors had claimed that she failed to pay more than €14.5 million in income tax for the years 2012 to 2014. According to the lawsuit filed in the Barcelona Court, Shakira declared the Bahamas as her primary residence during this period, which is a claim disputed by Spanish tax authorities.

The prosecution contends that Shakira, during the specified years, primarily resided in Spain with her then-boyfriend, Gerard Piqué, and their family at a Barcelona property she bought in May 2012. 

The general rule in Spain stipulates that if one resides or is domiciled in the country for more than half the year, they owe taxes. Speaking to Good Morning America in July 2022, Jesse Bolling, a trial attorney who is not involved in the case, emphasised the importance of proving residency, stating, "The general rule in Spain is, for each year, if you reside, if you're domiciled in Spain, you owe taxes. Domiciled is defined, for the most part, as being there for more than half the year. You're supposed to keep a diary or a calendar of where you are on every day."

What does Shakira have to say about the tax fraud case?

Shakira vehemently denies living in Spain during 2012-2014, asserting that her primary residence was the Bahamas, where she filed her taxes. Her public relations firm claims she has already settled the owed tax amount, along with additional interest, during the period she considered herself domiciled in the Bahamas.

In response to the charges filed in December 2018, Shakira, during a related court hearing in June 2019, adamantly denied any wrongdoing. A Spanish judge, in July 2021, recommended proceeding to trial, signalling that there was sufficient evidence to support the allegations.

In May 2022, a Barcelona court dismissed an appeal by Shakira, further paving the way for a trial. In July 2022, the singer rejected a settlement offer from prosecutors, opting to go to trial instead. The terms of the settlement offer were not disclosed, but Shakira's representative affirmed her commitment to cooperating with the law.

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"Shakira has always cooperated and abided by the law, demonstrating impeccable conduct as an individual and a taxpayer, and faithfully following the counsel of PriceWaterhouseCoopers, a prestigious and globally recognized tax firm," a representative for Shakira said at the time.

"Unfortunately, the Spanish Tax Office, which loses one out of every two lawsuits with its taxpayers, continues to violate her rights and pursue yet another baseless case," the statement continued. "Shakira is confident that her innocence will be proven by the end of the judicial process."

In a September 2022 interview with Elle, Shakira reiterated her innocence, challenging the accusations as "false." 

Speaking to the outlet, she said, "First of all, I didn't spend 183 days per year at that time at all. I was busy fulfilling my professional commitments around the world. Second, I've paid everything they claimed I owed, even before they filed a lawsuit. So as of today, I owe zero to them."

Emphasising her adherence to guidance from a renowned tax specialist firm, the singer stated, "I was advised by one of the four biggest tax specialist firms in the world, PricewaterhouseCoopers, so I was confident that I was doing things correctly and transparently from day one."

She also criticized Spanish courts for resorting to a press campaign to influence public opinion and coerce settlement agreements, by adding, "Even without evidence to support these fictional claims, as they usually do, they've resorted to a salacious press campaign to try to sway people, and apply pressure in the media along with the threat of reputational damage in order to coerce settlement agreements." 

What are the latest developments?

In a surprising turn of events, Shakira recently reached a settlement to avoid a trial over the tax evasion charges. The settlement addresses the alleged failure to pay €14.5 million in Spanish income tax between 2012 and 2014. As per the agreement, fines replace the potential jail time, and the trial is off the table.

While this settlement provides a resolution for the specified period, Shakira faces a second tax fraud investigation, in which the singer has been accused of tax evasion in Spain. Allegedly, she failed to pay €6.7 million in taxes in 2018.

Previously, Barcelona prosecutors claimed that the singer failed to declare millions in advance payments for her El Dorado World Tour, among other payments.

The prosecutors opened the second investigation in July 2023 but released the details in September 2023.

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Other celebrities who've come under the scanner!

Shakira is not the first celebrity to face Spanish authorities over tax evasion. Football stars Cristiano Ronaldo, Lionel Messi, and Diego Costa have previously settled cases, paying substantial fines. 

Meanwhile, last month, Spain’s supreme court upheld the acquittal of the Bayer Leverkusen coach Xabi Alonso in another tax evasion case, which reflects the varying outcomes celebs encounter in their legal battles. He initially refused to settle and eventually won at trial.