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Zara king Ortega falls foul of tax office

Spanish clothing billionaire Amancio Ortega has found himself on the wrong side of the country´s tax office and will now have to cough up almost €33 million (42.5 million) in unpaid taxes.

Published: 5 July 2013 10:18 CEST

Zara king Ortega falls foul of tax office

Forbes magazine recently listed Amancio Ortega as the third richest man in the world with a fortune of $57 billion. File photo: Miguel Riopa/Daniel Lobo/AFP

Spain’s High Court told the country’s richest man that he would have to pay up the back taxes for the years 2001 to 2003.

The court stressed the Zara founder was not guilty of fraud, and that the decision was about interpretation of tax rules, Spain’s El País newspaper reported on Friday.

In 2001, Ortega flogged off a bundle of Inditex shares pocketing €1.3 billion as a result.

Read The Local’s profile of Amancio Ortega: the richest man you’ve never heard of

He then reinvested the money via family-run companies in two property firms.

Such family investments are generally tax-exempt in Spain as a way to promote business activity.

But the High Court argued Ortega financial advisers had actually set up a “an artificial family network” and the clothing tzar would have to pay tax on assets earned.

Sources close to the massive clothing group said the issue was one of “technical discrepancies about interpretation” of the law, according to El País.

Inditex is the largest fashion retailer globally, with some 6,000 stores in 86 countries.

In March, Forbes magazine listed Amancio Ortega as the third richest man in the world with a fortune of $57 billion.

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Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance?

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes.

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner.

How did the government agree to change the employment allowance in its coalition deal?

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment allowance to 12.75 percent up to a maximum rebate of 53,600 kroner.

How might this be further increased, according to Børsen?

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance.

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement.

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.

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