Pavarotti Tax Trial Begins In Modena

by Ulrika Lomas, Tax-News.com, Brussels

17 September 2001

The trial of Luciano Pavarotti on tax charges will finally begin this week in his Italian birthplace of Modena, a few days before his 66th birthday. The singer, who could be jailed for three years, will attempt to convince the court that he is not liable to Italian tax because he has been a resident of Monte Carlo since 1983.

Nicoletta Mantovani, 31, Pavarotti's former secretary and now his lover, will be among dozens of witnesses expected to be called by both sides. Prosecutors want to question her about the singer's interests in companies and charity events which they believe prove he is resident in Italy. Pavarotti himself intends to appear in the dock tomorrow in his own defence.

Other witnesses are likely to include two of Pavarotti's former cleaning ladies, the Italian and American doctors who treat his throat infections and hip and knee problems, his dietician, a dermatologist and the director of a health farm. American investigators are said to have produced a thousand-page report on the affairs of the singer's California-based management company. Prosecutors will claim that this shows substantial transfers to Italy.

Pavarotti is accused of evading more than 40bn lira ($20m) of taxes between 1989 and 1995. He has already reached a settlement with the Italian Finance Ministry over the issue: in July last year, Pavarotti agreed to pay $5m immediately and another $7m in instalments over a two-year period. Afterwards, he was photographed shaking hands with the Italian Finance Minister, Ottaviano del Turco, who held him up as an example to Italian tax-dodgers.

In other countries, settling with the tax authorities usually implies that court action will be avoided, but the independent-minded magistrates in Modena want their pound of flesh, and are pursuing the tenor regardless of the settlement. The Modena authorities say that Pavarotti earns about $35m a year, and that his residence is clearly in Modena. Said Eleonora De Marco, the Modena public prosecutor: "the centre of his interests is not Monte Carlo but Modena, given that he has houses, family, and investments in six banks in the city, and in 11 companies which answer to him." The singer's Italian assets are said to include a residence and show-jumping complex near Modena, a villa where his former wife Adua lives with their daughters, and a farmhouse on the Adriatic Coast with six bedrooms, parkland and a pool.

The rules in Italy are that a person is liable for tax on his world-wide income if they are habitually resident in Italy, if the centre of their vital interests is there, or if they are registered with the Office of Records of the Resident Population for the greater part of the tax year. It's the 'vital interests' wording which is being applied in Pavarotti's case. Pavarotti's legal team say he will argue that 99% of his professional activity takes place outside Italy - making it unfair to levy taxes on him when he has already paid tax elsewhere.

"Pavarotti is annoyed that his life is being dissected like this," said Massimi Leone, his lawyer. "He does have an ex-wife, and three daughters by her, in Italy but for him it is only a holiday destination. "I asked him whether any of his Italian friends could prove that. He gave me a list of people who say that every time they want to see him, they have to fly to America or some other place."

Pavarotti has been under investigation by the finance ministry since 1996 as part of a crackdown on artists, entertainers and sports stars who claim they live in Monaco. At one point a senior ministry official branded him as "a traitor to Italy".

Tax investigators have also turned their attention to Mantovani, who Pavarotti intends to marry when he has agreed how much he must pay to Adua Veroni, whom he divorced last year.

Mantovani is under investigation for tax evasion in a separate inquiry centring on Pavarotti and Friends, a series of charity concerts in Modena that she organises. Investigators have accused the company concerned of failing to declare nearly 63 billion lira received in ticket sales between 1998 and 2000, and in the process allegedly underpaying over 15 billion lira in tax. There have also been questions raised about Mantovani's substantial salary, and payments which she made to her father. The prosecutor heading the enquiry, Manfredi Luongo commented recently: 'From what we can tell so far there is a lack of transparency in the way the company is run.'

However, the lady in question denies all allegations. 'Why on earth should charity be taxed?' She asked.'We didn't report the revenues in the accounts because we pass on the money directly to the organisation that oversees the projects for which we raised the funds.' Mantovani has protested at the charges against Pavarotti, and those against her.

There's no doubt that substantial sums of money have been raised for charity. The Pavarotti Music Centre in Mostar, Bosnia, opened in 1997 and has been much praised by such disparate fans as experimental electronic musician Brian Eno and the Dalai Lama. Other recipients have included charities for children in Liberia and Afghanistan.

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