Becker Trial Turns Spotlight On ‘Loophole’ In German Tax System

by Ulrika Lomas, Tax-News.com, Brussels

23 October 2002

Boris Becker's appearance in a Munich state court today on charges of tax evasion has cast a spotlight on the many other German sports professionals choosing to live elsewhere in order to minimize taxes, according to a Reuters report.

The German tennis star stands accused of evading the equivalent of $5 million in German taxes by claiming that he was tax resident in Monaco, while actually spending most of his time living in Germany.

Other German sports personalities, such as soccer player, Franz Beckenbauer, tennis player, Michael Stich, and Formula One drivers Michael and Ralf Schumacher also claim tax residence in countries with more forgiving tax regimes, although according to Reuters, all fulfil the criteria of having their main residence abroad, and spend at least 183 days out of the country.

However, according to the news service, despite their compliance with the letter of the law, falling tax revenues which have forced the government to make spending cuts may be changing the attitude of the German public - which have always been fairly tolerant of such behaviour - towards their home-grown tax exiles.

Speaking earlier this year, Ralf Schumacher explained that: 'Germany is simply a taxation jungle. I don't feel like having tax collectors on my heels. I don't want to be hunted down like Boris Becker or Steffi Graf. That's why I used the chance to go abroad for tax reasons.'

However, according to Rolf Hauschild, deputy sports editor of leading German daily newspaper, Bild, this attitude may soon start to grate on the taxpaying public, if indeed it doesn't already:

'The tax dodging by the sports stars is something that's upsetting the so-called 'little guy' more and more. But there has not yet been any widespread outrage about it because a lot of people accept that these sport idols have done a lot for Germany's image abroad.'

He admitted: 'I know it's crazy but that's the way it is. Most are envious they don't have a chance to avoid taxes like the sports stars themselves.'

Also speaking to Reuters, the president of the German taxpayers' association, Karl-Heinz Daeke echoed this sentiment, observing that: 'The outrage just boils over in the average wage earners and especially those with lower incomes who don't have the same chance to move their residence abroad.'

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