Portugal chief prosecutor probes Deloitte’s million-euro tax structure in Malta

Portugal’s chief prosecutor is investigating a tax structure used by 48 members of the Big Four auditing firm Deloitte in Portugal, to remit €53 million from Malta companies they used to pay lower taxes.

The investigation comes on the back of a MaltaFiles report by Expresso, which was provided with the shareholding structure of the Deloitte partners by MaltaToday, as part of its role in European Investigative Collaborations (EIC).

The investigation was opened following an anonymous complaint to the Attorney General's Office (PGR), the Securities Market Commission (CMVM) and the Banco de Portugal, in September 2017 – three months after MaltaFiles published its first stories.

The tip included information as to how Portuguese partners in the audit firm issued their bills using companies in Malta instead of Portugal.

Malta allows foreign shareholders with tax-resident companies to book their profits here, and then enjoy a six-sevenths deduction on their full tax paid, resulting in an effective 5% tax rate here.

The PGR said the information “gave rise to an investigation and is under investigation at DIAP (Lisbon’s department of investigations).

Prosecutors received details of the business accounts held in Portugal, Malta and Angola, from Portugal’s securities commission.

Using data from MaltaFiles, MaltaToday first outlined the shareholder structure of this network of companies in April 2016. Formally called Deloitte International Limited, the company was owned by four Maltese companies (Kane, Ramp, Primus and Monty), in turn owned by dozens of Portuguese companies.

This structure enabled the Maltese companies to receive dividends from activities in Portugal and benefit from an effective tax rate of 5%.
In the complaint to the Portuguese chief prosecutor, it was alleged that such a structure could be a crime of tax fraud, while raising ethical questions about companies from Portugal’s Society of Chartered Accountants actively involved in tax avoidance structures.

In Portugal, MaltaFiles achieved an instant effect with prosecutors discovering 100 subjects making use of tax avoidance structures through Malta. 49 subjects voluntarily registered over €31 million in income after the revelations, resulting in €8 million in recovered taxes for Portugal.

Deloitte Portugal did not clarify if its partners had regularised their tax affairs following the reports in Expresso, and that it had not received any notice from taxation authorities.

The MaltaFiles investigation involved 49 journalists from 13 publications from 16 countries through the European consortium EIC - European Investigative Collaborations.

The EIC consortium in 2016 conducted the Football Leaks investigation (continued in 2018) in which it revealed how several football stars turned to tax havens to hide revenues and pay less taxes, some of them ending up delivering large millions of euros to the Spanish tax authorities, as happened with Cristiano Ronaldo.