Shakira's Tax Case Highlights Complexities of International Touring for Artists

In 2011, Shakira spent 163 days in Spain between stops on her blockbuster Sale el Sol world tour. That tally ended up being crucial in the star’s long quest to void a $69 million tax penalty levied by the European nation — showing just how granular the work of international tour accounting can get.

Experts helped Billboard unpack Shakira’s Monday (May 18) legal victory following an eight-year battle with Spanish tax authorities. In this ruling, Spain’s National Court acquitted the Colombian star of tax fraud and ordered the return of 60 million euros ($69 million) that had been levied for the 2011 income tax year. She separately paid a $7.6 million fine in 2023 for Spanish taxes between the years of 2012 and 2014.

Related

How Tax Season Becomes a Mess for Touring Musicians

J-Pop Festival Zipangu & Xbox Team Up for Sung Kang Fashion Collab

Kodak Black Arrested for Second Time in Less Than a Month, This Time for Fleeing Law Enforcement

Spanish authorities alleged in the 2011 case that Shakira owed taxes to them because she was a resident of Spain while on tour that year and dating Spanish soccer player Gerard Piqué. Shakira maintained she merely visited the country frequently for a long-distance relationship, and her true country of residence was the Bahamas.

Music industry professionals say the question of where one lives can be complicated for someone whose job requires them to traverse the globe. “Touring artists live unusually mobile lives,” says Russell King , an entertainment lawyer who handles tax structuring for many touring musicians. King, who was not involved in the Shakira case, says this means musicians have some flexibility in deciding where to declare residence — but they must show they have real roots in a country to satisfy the tax authorities.

“Countries such as Spain have really tightened their regimes and are looking to enforce this,” explains King. “That’s what happened here, but it turned out Shakira had done things properly and was able to emerge victoriously.”

Related

Is the Taxman Unfairly Targeting Non-U.S. Live Acts? ‘Touring Across Europe Has Become Financially Precarious’

In Spain, and in many other jurisdictions, a person is considered a resident for tax purposes if they spend at least 183 days of a year within the country’s borders. (The country has been particularly aggressive with celebrities in recent years, bringing tax cases against the likes of Lionel Messi and Cristiano Ronaldo over the past decade.) That means Shakira’s case came down to meticulously retracing the star’s 2011 calendar for the court to ultimately determine that she was 20 days short of that threshold.

This sort of to-the-day schedule tracking is a crucial tax consideration for international touring artists, since they don’t want to cross the 183-day limit for multiple countries and become at risk of double taxation. “I advise my clients to maintain a calendar where they document every single day where they are, just for this reason,” King says.

Timothy Jorstad , a business manager for rock acts who also had no involvement in Shakira’s case, similarly tells Billboard that keeping an eye on the calendar is a big part of his job when it comes to certain touring musicians. This is the case for his client Arnel Pineda , the lead singer of Journey , who is a resident of the Philippines but spends much of any given year in the U.S. on tour.

“We monitor that very closely,” says Jorstad of Pineda’s calendar. “We make him go to Canada for part of the tour, or Mexico or South America or Europe. We try to keep him out of here if he’s coming close to that 180-day period.”

An artist’s country of residence is just one piece of the complex accounting system that managers and attorneys must handle for international tours. There is also the issue of taxes in each country they visit on tour, where artists must pay a portion of concert revenues to the local authorities. If handled correctly, these foreign taxes can be applied as credits to get money deducted from home-country income taxes.

Related

Pandora Papers: Elton John, Shakira and Ringo Starr Named in Leaked Tax Shelter Docs

This work can be complicated by the fact that each country has a separate taxation system with its own quirks. In the U.S., for example, the IRS will levy a 30% tax on international acts’ concert gross revenues unless they enter into what’s known as a central withholding agreement. King says he often helps his clients sign these advance agreements to reduce withholding, since the 30% rate “is often such a harsh cash-flow hit that it can grind tours to a halt.”

As Jorstad puts it, “some countries are more difficult than others” when it comes to tax regimes. He cites as an example his client the Doobie Brothers , who were recently denied touring-specific tax deductions for some U.K. shows after the British government claimed these were actually “album promotion costs.”

“England is getting to be a pain in the ass,” says Jorstad.

The trick to navigating this mathematical puzzle, says Jorstad, is to contract with local accountants and specialty law firms at each tour stop. By working with people who are experts in a country’s specific tax requirements, artists can be sure they are in full compliance with the laws of every place they pass through while on the road.

King also says artists should rely on professionals, not “shortcuts,” to make sure their cross-border touring finances are structured correctly. Significant work should be put into mapping out all this at the outset of a tour; otherwise, an artist could come to regret it later on.

King works with many Latin musicians and says he often invokes the Spanish saying “ lo barato sale caro ” to get this point across. Rough translation: “What is cheap eventually becomes expensive.”

_Originally reported by [Billboard](https://www.billboard.com/pro/shakira-tax-battle-international-touring-analysis/)._