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Stars in Germany, tax for Austria

Munich: Boris Becker’s trial for tax evasion, which begins Wednesday, could end with the fallen German tennis hero and three-time Wimbledon champion heading for jail.

The dispute over $5 million in German tax payments that state prosecutors say Becker failed to pay during his career by listing a bogus foreign address has put the spotlight on loopholes in the country’s tax system.

The prosecution of Becker, once heralded for tennis achievements that helped West Germany shake off post-war guilt, also highlights a controversial practice of many ultra rich German sportsmen who move abroad to avoid high taxes at home.

While the German public has until now shown sympathy for sporting tax exiles, a steep drop in tax revenues now squeezing the government into unpopular spending cuts may lead to a frostier attitude towards wealthy sports heroes living abroad.

Franz Beckenbauer, Michael Stich, Michael Schumacher and his brother Ralf are just some of the leading Germans who long ago moved abroad to escape the comparatively high level of taxes in Germany.

Steffi Graf, by contrast, stayed in Germany but her father, who was her manager, tried to conceal part of her income and ended up spending two years in jail after being convicted for evading $7 million in tax on his daughter’s earnings.

The big names moving abroad started a trend that has led soccer players on second division teams in towns near the Luxembourg or Belgian borders to relocate their homes across the frontier to legally avoid taxes. They drive or cycle to work in Germany.

Prosecutors say Becker pretended to be living outside Germany while actually spending much of his time in Munich. Beckenbauer, Stich, the Schumachers and others have their main residence abroad and spend at least 183 days each year living outside Germany.

“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,” says the deputy sports editor of the influential daily Bild. “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.”

Beckenbauer, Stich and Ralf Schumacher live just south of the German border in Austria, where tax rates are arranged in special deals with the Austrian finance ministry. Michael Schumacher lives in Switzerland, where he reportedly pays a fraction of the tax he would face in Germany.

Beckenbauer lives in Kitzbuehel, Stich in Salzburg and Ralf has moved to Hallwang near Salzburg in 2001 from Monaco after negotiating a tax deal with the Austrian finance minister. The terms have not been made public.

“Schumacher didn’t pay any taxes in Austria and now he’s paying a not insignificant sum in Austria,” the Austrian finance minister was quoted as saying in a German business daily.

It estimated the driver paid between 1.1 and two million euros on income of 15 million euros — far less than the seven million euros he would be liable for under German tax.

“Schumacher is a big win for Austria,” Grasser said. “He’s a small but significant factor for the economy.”

“Germany is simply a taxation jungle,” Ralf has said. “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.”

Karl-Heinz Daeke, president of the German taxpayers’ association, criticised Schumacher for his attitude. “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,” Daeke said.

Michael Schumacher, who has won a record six Formula One titles and 64 races in his career, has lived in Switzerland for years. According to estimates published in another daily, Schumacher has an annual income of some 50 million euros and assets worth 300 million. He paid no Swiss income tax and only 500,000 Swiss francs in tax based on the value of his home in Vufflens-le-Chateau. He has, however, been immune from criticism because he has brought more glory to Germany with his six world titles. Unlike Ralf, he stays quiet about tax.

A senior official at the German taxpayers’ association, said the tax exiles’ position was unfair but understandable given the top income tax rate of 48.5 per cent at home. “From a moral point of view, people should make up their own minds on the top sports earners who have fled abroad to avoid German taxes,” he said. “But considering the very high level of tax in Germany, it’s understandable for people to look for ways to escape the burdens of the state.”

After several years of investigation, Munich prosecutors charged Becker, 34, with tax evasion. They allege that between 1991 and 1993 he told German tax authorities his residence was Monaco, a tax haven, while he was actually living in Munich.

Prosecutors accuse Becker of withholding taxes from authorities worth 10.4 million marks ($5 million). If convicted, he faces up to five years in jail.

Becker enjoyed a remarkable rise to the top of the tennis world following his first Wimbledon title as a little-known teenager in 1985. The fresh-faced German’s unexpected win spawned a tennis boom and gave a country desperately short of tennis heroes something to cheer about.

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