Jacques Villeneuve’s multimillion-dollar tax dodges uncovered in leaked recordsdata

There was prize cash from profitable the Indianapolis 500 and the IndyCar championship within the mid-Nineties, a System 1 contract with the Williams group from 1996 to 1998 and a profitable $100-million deal to drive for British American Racing for 5 years after that.

Add in picture rights, a classy Montreal resto-bar and quite a few luxurious Quebec properties, and the sums might get dizzying. 

But someway, when he lived in Quebec in 2010, he declared simply $6,431 in private revenue — and claimed a tax credit score for low-income households. The following two years, he declared $3,224 and $5,782 in revenue.

A lot of Villeneuve’s cash, it seems, was banked in offshore havens, principally utilizing tax avoidance methods. Villeneuve additionally did not reside in Canada for many of his life and so did not owe tax right here for these years. 

Nevertheless, he was a Quebec resident from 1993 to 1996 and 2007 to 2013, and tax authorities are now accusing him of not reporting his full revenue and property — together with a Swiss checking account.

Tax consultants consulted by Radio-Canada additionally mentioned that the tax avoidance methods he used, like shifting his picture rights offshore, level to main issues with how the legislation is written.

Villeneuve’s dealings in tax havens are revealed within the Pandora Papers, an enormous leak of 11.9 million confidential recordsdata from quite a few offshore jurisdictions. The information have been leaked by a confidential supply to the Washington-based Worldwide Consortium of Investigative Journalists, which shared the knowledge with its associate information organizations around the globe, together with CBC/Radio-Canada and the Toronto Star. 

The information present that Villeneuve’s first offshore firm goes again to the early years of his profession. He had been racing in Japan in 1992. However he got here again to Quebec, the place he was born, for a System Atlantic race that summer season in Trois-Rivières, the place he positioned third. One month later, an entity referred to as Goldstar Holdings Corp. was integrated within the Bahamas as a holding firm for the driving force’s race winnings and sponsorship cash. 

On the time, Villeneuve and his supervisor, Craig Pollock, have been in negotiations with Imperial Tobacco for him to return to Quebec and be a part of the System Atlantic collection full-time. Having an organization within the Caribbean might have permitted the racer to keep away from revenue tax in Canada on revenues booked by his firm within the Bahamas, the place the company tax fee is zero.

Such tax ways should not inherently unlawful however they do deprive authorities coffers of giant quantities of income yearly that might in any other case pay for colleges, well being care and social companies.

Nameless shareholders

Then, in January 1994, whereas he was nonetheless dwelling in Canada, Villeneuve and his supervisor Pollock arrange a belief within the British Virgin Islands, one other offshore haven with a zero revenue tax fee. 

A doc within the Pandora Papers leak reveals the “Moritz Settlement,” because the belief was identified, was established “to protect, handle and shield the household property of Mr. John Craig Pollock and Mr. Jacques Villeneuve.”

The belief turned the shareholder of Goldstar Holdings, Villeneuve’s Bahamas firm. However there was no paper path. The shares of Goldstar have been turned into so-called bearer shares, whereby whoever possesses the precise inventory certificates is the proprietor of the fairness within the firm. The homeowners’ names do not seem in any register, which permits for full opacity. 

“The one motive to make use of bearer shares is to maintain issues secret and never let anybody else, tax authorities or others, know who the shareholder is,” mentioned André Lareau, an affiliate professor of tax legislation at Laval College in Quebec Metropolis. 

The Bahamas abolished using bearer shares in 2000.

Video video games

After Villeneuve received the Indianapolis 500 and the IndyCar season championship in 1995, he graduated to the summit of car-racing glory: System 1. He joined the Williams F1 group, moved to zero-tax Monaco in 1996 and entered a world the place tax dodging was the norm.

“He was surrounded by individuals who sheltered revenue in tax havens, whether or not it was [F1 boss] Bernie Ecclestone or the group homeowners,” mentioned sports activities columnist Martin Leclerc, who adopted Villeneuve’s profession for the Journal de Montréal newspaper.

As he rocketed to the heights of the F1 standings, taking the championship in 1997 forward of the legendary Michael Schumacher, his fortunes rose hand-in-hand. Leclerc estimates Villeneuve would have earned north of $15 million a season in these years from his contract with Williams.

One other main supply of revenue for sports activities stars, past wage and prize winnings, are picture rights for issues like commercials, sponsorships and video video games. It is common follow for picture rights to be held by shell corporations in tax havens.

In 1998, a brand new firm referred to as Villeneuve Multi-Media was integrated within the Bahamas, with Goldstar Holdings as its principal shareholder, to e book revenues from Villeneuve’s videogame picture rights. A number of years later, Ubisoft created the sport Velocity Problem: Jacques Villeneuve’s Racing Imaginative and prescient for PlayStation 2, GameCube and Home windows computer systems, underneath license from Goldstar Holdings.

Tax legislation professor Lareau mentioned that whereas authorized, these sorts of preparations are “so synthetic.”

“My picture rights belong to me, and I’m in a position, by a authorized fiction, to switch the revenue that comes from my title and picture to a international firm,” he mentioned. “It is like if I say, ‘I am a very good baseball participant. I’ll reduce off my arm, ship my arm elsewhere and my arm will then change into the property of an offshore firm.’ “

Then in 1999, Villeneuve signed with a brand new F1 group, British American Racing, for $100 million over 5 years.

“He was the most effective paid athletes in his subject,” Leclerc mentioned.

Return to Canada

The transfer to BAR did not pan out — Villeneuve by no means received one other F1 race — however his lack of success on the observe belied a lifetime of luxurious: a 40-metre yacht, the Bliss, in Monaco and a chalet in Switzerland.

The Pandora Papers present that one other British Virgin Islands belief, the Glion Belief, was arrange in 2002 “to protect, handle and shield the household property of Mr. Jacques Villeneuve.”

Lastly, in 2007, after quitting F1 for good, Villeneuve returned to Quebec to strive his hand at NASCAR racing. He moved right into a two-storey penthouse in Outdated Montreal with a non-public terrace and large sight strains of the town’s downtown. 

Round that point, he divested his curiosity in Goldstar Holdings. And within the following years, a few of his different Caribbean corporations turned inactive or dissolved.

However his Outdated Montreal condominium was owned by an organization based mostly within the British Virgin Islands, Sapphire Blue Holdings. When the condominium bought in 2009, Villeneuve signed a few of the papers on behalf of Sapphire.

The previous F1 champ additionally bought a 340-hectare property within the Laurentians, the place he constructed a big log cabin. That property, too, traced again to an offshore firm, this time one referred to as Lessons Etoile SA in Luxembourg.

And Villeneuve ran a resto-bar, referred to as Newtown, on Crescent Road in Montreal. That, too, was formally owned by an offshore firm, Fairstar Investments within the Bahamas. 

Troubles with the tax authorities 

Villeneuve and his former supervisor Pollock did not reply questions put to them by Radio-Canada.

In an interview with the Montreal every day La Presse in 2013, the race-car driver mentioned he adopted the tax legal guidelines of each nation he lived in. He additionally informed the Journal de Montréal newspaper that 12 months that he had all the time paid his taxes throughout his time dwelling in Quebec. 

Revenu Québec does not agree. After Villeneuve moved overseas, the provincial tax company started auditing him to confirm that he had declared all his worldwide revenue whereas dwelling in Quebec. Villeneuve was required handy over an inventory of all his international property, based on courtroom filings as a part of a tax dispute between him and the company. 

Revenu Québec alleges Villeneuve delayed in responding after which didn’t declare a Swiss checking account. It additionally claims he hasn’t supplied a passable clarification for the supply of a number of deposits to his HSBC checking account in Montreal. And the company is contesting a $300,000 “mortgage” from Goldstar Holdings, his Bahamas holding firm. 

Villeneuve’s attorneys are preventing again in courtroom, saying he did not must declare these quantities as a result of they weren’t taxable. 

Paperwork filed as a part of the courtroom case present the previous F1 champ declared private revenue of $6,431 in 2010 and claimed a tax credit score for low-income households. Revenu Québec’s filings say he declared simply $3,224 in private revenue the next 12 months, and $5,782 in 2012. These quantities are beneath the minimal threshold to pay any revenue tax.

Notably, in 2012, Villeneuve made controversial feedback about Quebec college students protesting in opposition to tuition hikes, saying their calls for weren’t fiscally practical. “The place does the federal government get the cash? From taxes, from promoting stuff. The following factor they’ll say is, ‘Effectively, take it from the wealthy,’ ” he mentioned. “And that is when you could have the wealthy transferring to a different nation.”

Villeneuve’s racing revenue from these years was routed to a Quebec company, Newtown Racing Inc. Its monetary statements, filed in courtroom, present it had whole revenues of greater than $1 million between 2011 and 2013. However losses booked in 2010 and 2012 largely offset that revenue, and the corporate paid a complete of simply $27,000 in tax over these years.

A Montreal lawyer for Villeneuve, Martin Delisle, mentioned he would not remark whereas the case is earlier than the courtroom. 

Widespread tax dodging by sports activities stars poses an moral downside around the globe, mentioned Edoardo Traversa, a professor of tax legislation at Louvain College in Belgium who has written concerning the tax ways {of professional} athletes.

“We’re witnessing an issue which is the equal of doping, however from a tax standpoint,” he mentioned. States ought to sort out this downside as they’ve completed just lately with tax dodging by multinational companies, he mentioned.

In 2013, Villeneuve left Quebec for Andorra, a tiny tax haven between France and Spain. He then moved again to the Swiss Alps, and at last took up residence in Italy — a rustic that gives a particular €100,000-a-year ($143,000 Cdn) flat tax to new residents on their international wealth.