The luxury villa where Boris Johnson Stayed on holiday last month linked to Costa del Sol real estate companies owned by Zac Goldsmith’s family who participated in a multi-million pound tax evasion scheme, according to Spanish courts.
Legal documents obtained by the Guardian show that tax inspectors ordered two real estate companies owned by the Goldsmith family to pay € 24m (£ 20m) in unpaid taxes and fines after investigating what they said was a suspicious real estate transaction.
The results of the tax authorities have been confirmed by one of Spain’s highest courts, where judges agree that companies effectively engage in a deliberate effort to evade taxes and commit “serious” violations of the law.
Documents show that Spanish authorities are still seeking to recover the funds and may even seize parts of the family’s land, which is spread over more than 600 hectares of private forest about 10 miles from Marbella’s coastline.
A Swiss lawyer for one of the companies denied that the case constituted a matter of “tax evasion” and described it as a dispute that was the result of an incorrect land assessment by the Spanish tax authorities. She said the outcome against her client was “extremely difficult to understand, to say the least”. The court’s papers show that there will be a further appeal.
However, the revelation raises difficult questions for the Prime Minister, who has already faced criticism for refuses to declare its use of the luxury property in the MPs’ register of interests, which would require him to disclose the monetary value of the gift from the Goldsmith family.
Downing Street has insisted that the holiday in the villa, which costs £ 25,000 a week to rent, was “unrelated to the prime minister’s parliamentary and political activities”. Zac Goldsmith, a Conservative minister, is a longtime friend of Johnson and his wife, Carrie. In 2019, Johnson personally named Goldsmith House of Lords after his friend lost his seat as MP.
Johnson will now likely be asked how much he knew about the Spanish tax investigation of companies owned by the Tory minister’s family before living in their villa, which is in a secluded corner of a property next to swimming pools, a tennis court and an organic farm. .
The revelations raise questions for both Goldsmith, a senior minister, and his brother Ben, a non-executive director of the environmental department, about the extent to which they were aware of or involved in the real estate business.
None of the brothers answered questions in detail about the extent of their knowledge or involvement in the transactions at the heart of the tax investigation. In an email, Ben Goldsmith said: “This whole thing serves as a warning to any Briton who is thinking of owning a property in Spain.”
The Goldsmith brothers inherited their wealth from their father, Sir James Goldsmith, who died in 1997 with a fortune of £ 1.2 billion. The wealth of the Goldsmith senior now lies in a discretionary trust operated for the benefit of his children.
The family first acquired Tramore’s property, the site of the villa where Johnson lived, in the 1980s. In 1999, it is believed that the goldsmiths used a company attached to a Cayman Island structure to acquire additional land adjacent to the villa, thereby expanding their property.
Recently, separate Goldsmith-owned offshore companies have been used to own the patchwork of land and properties, all located in the same hills around the quiet mountain village of Benahavís.
The Swiss lawyer representing one of the companies accused of evading taxes, Guadalmansa Administraciones, said the villa where Johnson lived was “completely separate” from the property caught in the tax dispute.
While the villa Johnson lived in was not owned by a company involved in the tax investigation, public records suggest it is part of Goldsmiths’ broader property holdings in Benahavís.
It is unclear why Zac Goldsmith has only declared one of at least three companies that own parts of his family’s land outside the village. Lords’ register of interests only lists a Spanish and Maltese company as a shareholding in land in Andalusia.
But documents suggest a more complex trust structure has been used to hold land in the area and generate revenue from holiday homes, including businesses that have not been declared. A spokesman for the peer insisted: “All reportable interests have been properly and transparently declared.”
Spain’s tax agency first began investigating the Goldsmith family’s businesses in 2012. Inspectors found themselves in an unusual real estate transaction when one of the companies transferred land on a large property to a related company.
According to court documents, in 2008 – two years before Goldsmith became a Member of Parliament – the Minister’s family separated parts of its land near the village of Benahavís and transferred it from one of their companies – Guadalmansa Administraciones – to another called Benaltos Inversiones in return for a € 5 million deal. debt to the company.
Inspectors, however, argued that the debt was in fact “fictitious” and the companies should have treated the transaction as a “profitable transfer” rather than a repayment of debt. They claimed that the transaction significantly undervalued the land, which they estimated was in fact € 23.2 million. worth.
After a year-long investigation, the agency ordered the companies to pay a total of € 24 million. in unpaid taxes, interest and fines. It claimed that the companies had infringed a law requiring the transfer of assets between related parties to be valued at their normal market value.
It is crucial that inspectors claimed that the companies failed to declare the financial gains arising from the transfer by filing inaccurate tax returns.
In 2016, Spain’s central economic and administrative court (CEAT) rejected an appeal by companies against the agency’s decision.
The companies’ lawyers had claimed that the debt of DKK 5 million. EUR, which Guadalmansa owed to Benaltos, was genuine and that an assessment of the property ordered by the tax office was deficient. They claimed that the fines were disproportionate.
However, the court accepted that the debt was artificial and not a normal commercial scheme, noting that “several companies domiciled in tax havens” were involved “for no apparent financial reason”.
The court also accepted the tax authority’s valuation of the property and noted that only eight months after the transfer, the land was used as security for a loan and valued at € 23 million. According to the verdict, there was “no doubt” that Benaltos was guilty and its inappropriate actions had “resulted in a loss to the Treasury”.
Two years later, one of Spain’s highest courts, the audience national, upheld the tax court’s ruling. Documents suggest a further appeal has been lodged with Spain’s Supreme Court, but companies can only appeal the 2018 ruling on a legal point instead of on the facts of the case.
The Swiss lawyer representing Guadalmansa maintains that the Spanish tax agency has significantly overvalued the property. It said the valuation was “based entirely on a wildly deviant valuation” by an agency-appointed valuation firm, which has since acknowledged that they “made a mistake”.
It added: “The purchase was correct and all taxes associated with the property have always been paid in full.”
Meanwhile, the two jeweler companies that the tax authorities have investigated appear to be in financial danger. Both were put into voluntary insolvency in 2019. Documents suggest that in April last year, as a result of the dispute, they owed more than € 20 million. to their largest creditor: the Spanish state.