Top 13 Most Scandalous Tax Evasion Scams

This year we have seen governments around the world announce that they will take unprecedented measures against tax evasion. As a result, there has been a sharp increase in self-declared tax evasion, as well as cases uncovered by the authorities. Many of the most notorious tax havens have signed agreements with other countries, granting them access to details of account holders with funds deposited there for purposes of tax investigations.

Total sums involved are staggering. Various reports have estimated that tens of billions in tax bills go unpaid around the world annually, with one even suggesting that the level of tax avoidance exceeds the value of the entire US economy. Even in the case of the single examples shown in the following list, the accumulated costs can be incredibly high. Here are thirteen examples of tax evasion.

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13 Jose Socrates


Portugal’s former Prime Minister, Jose Socrates, became one of the first heads of government to be accused of tax evasion fraud when he was officially detained last month in Lisbon. The former Prime Minister was remanded in custody on the 25th of November, 2014, and is now the subject of a formal investigation into tax evasion, as well as money laundering. Suspicions began to arise by one of the country’s main banks, which drew attention to unusual bank transfers of very large sums of money.

12 Deutsche Bank


The latest tax evasion charges against the bank were lodged recently, on the 8th of December, 2014, in a New York court. The United States authorities are seeking to recover close to an extreme amount of $200 million in unpaid taxes, penalties and accumulated interest on various transactions that Deutsche Bank carried out with shell companies, beginning early in 2000. Additionally, the bank has also been investigated for failing to pay taxes in Germany, where its main headquarters are located.

11 Walter Anderson


When he was sentenced in 2007, Walter Anderson had been charged with committing the largest personal tax evasion in the United States. He was found guilty of failing to pay a total of $200 million by stashing profits in a number of oversees bank accounts. Anderson had been a public figure prior to his trial, having tried to save the Russian space station Mir before it was destroyed on re-entering the Earth’s atmosphere. He remained in prison until late 2012. During that time, a US tax court ruled in 2011, that he would have to pay the IRS more than $247 million in unpaid tax and penalties, a judgement which was upheld in an appeal the following year.

10 Volkswagen


The well-known auto brand is Germany’s most profitable concern, but at least some of that is due to its preferential tax arrangements. Thanks to its Belgian subsidiary, Volkswagen Group Services, the company secures tax free profits in that country. In 2012, Volkswagen Group Services paid no taxes on profits of over €153 million ($191 million) and in 2011, it was €141 million. Remarkably, the arrangement is currently a legal one, although plans to reform the tax systems across Europe could see that change in the very near future.

9 Starbucks


Making use of its international network, Starbucks reported taxable profits in Britain on just one occasion in fifteen years. Until it made a £5 million ($8 million) payment this year, it had paid just £8.6 million in taxes in the UK, over a span of fifteen years. This compares with sales of £400 million alone in 2013. Thus, the company was effectively paying no tax. The company’s tactics to avoid the British tax collector included the paying of royalties to a Dutch subsidiary, the purchasing of coffee beans from Switzerland, and the lending of funds to other parts of the business. The revelations provoked a major public outcry and Starbucks has since committed to paying its corporate tax bill.

8 AbbVie


The US pharmaceutical company made an offer in July, to purchase the British-based Shire firm. The move was aimed at taking advantage of so-called inversion, a term for a procedure in the US whereby firms, which are more than 20 percent owned by foreign companies, can declare their taxes abroad. The deal would have ended up costing the US treasury over $1 billion annually. However, in the wake of the Obama administrations tax evasion clampdown unveiled in September, AbbVie announced recently that it was no longer recommending purchase of Shire.

7 Bernie Ecclestone

The renown Formula 1 chief, Bernie Ecclestone, was accused by Britain’s inland revenue of the largest personal case of tax evasion in UK history. According to a secret document released earlier this year, the tax authorities made a deal with him to settle an outstanding tax bill of over £2 billion, with a payment of a mere £10 million. Ecclestone allegedly transferred large quantities of his assets through his wife to several family trusts based in Liechtenstein, another European tax haven. The investigation lasted over nine years before the deal was officially struck.

6 Paul Daugerdas


The former lawyer was sentenced to fifteen years in jail for a massive tax fraud, which ran over a ten year period. Between 1994 and 2004, Paul Daugerdas advised approximately 1,000 wealthy clients on how best to evade taxes by moving money offshore. The result was a total of $7 billion in tax savings for these individuals, and a further $1 billion in fake losses. US prosecutors described it as the largest criminal tax evasion scheme they had ever seen. The law firm where Daugerdas worked was forced to close following the scandal, and he was ordered to pay several hundred million dollars in restitution and penalties by way of compensation.

5 Credit Suisse


The guilty plea by Switzerland’s second largest bank in a criminal tax evasion case in May, made it the biggest financial institution in twenty years to be found guilty of assisting tax avoidance. The year-long trial exposed its practice of helping wealthy Americans to put their wealth in secret offshore accounts, so as to avoid income tax costs. The bank opened Swiss bank accounts for 22,000 Americans, according to a US Senate report, believed to contain total funds of between $10 billion and $12 billion. They went even further, concealing these accounts from the IRS, and enabling bank staff to breach codes of conduct. The court handed the bank a fine totaling $2.6 billion, which it agreed to pay.



The second Swiss bank to be embroiled in a tax evasion scandal in a matter of months, UBS has been accused by French investigators of helping conceal almost €10 billion in funds in offshore accounts. If found guilty, the final penalty could dwarf the fine imposed on Credit Suisse and become the largest ever fine enforced on a financial institution for this crime. The bank is no stranger to tax evasion allegations, having paid the US $780 million in 2009, to settle a charge, and also $300 million in Germany for a similar accusation earlier this year. Another major trial in the United States recently acquitted a UBS executive alleged to have led a separate tax evasion scheme.

3 Apple


In September this year, the European Union ruled that Ireland’s tax authority had acted outside of international regulations when it reached a tax deal with Apple, that saw the companies tax bill slashed. Ireland is a popular base for many international companies, because it only charges a corporate tax rate of 12.5 percent. But according to a US senate investigation, Apple does not even pay 2 percent of tax in Ireland. The company has been headquartered in Cork since 1980, and investigators suggest that the arrangement allowing it to pay such low rates has been in place for twenty years. The Financial Times recently estimated that if the tax deal is ruled illegal, it could face paying back billions in unpaid taxes.

2 Cyprus


Cyprus is another country which has attracted companies with extremely low corporation tax rates, who ultimately base themselves on the island to avoid larger tax burdens at home. This has been especially popular with Russian firms, which have used Cyprus as a base to reinvest money back into Russia, due to very favorable agreements between the two countries involved. The EU has also expressed significant concerns about the enforcement of tax laws in the country, suggesting that even the low levels of tax may not be collected.

1 Luxembourg


At the beginning of November, evidence came to light showing that the tiny duchy of Luxembourg had assisted companies with avoiding tax on a huge scale. The International Consortium of Investigative Journalists released thousands of documents, which contained tax agreements between the Luxembourg government and approximately 1,000 companies. These agreements had facilitated the transfer of their profits through the duchy, cutting their rate of tax to around 1 percent. The best guess at the amounts involved suggest that since 2000, more than a trillion euros in savings have been made by companies. The documents also revealed that accountancy firms had an important part in arranging the deals.

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