People do relocate because of taxes. I’ve represented individuals during residency audits, and when they really have relocated they’re fairly simple. However, when the individual has relocated in name only, it’s quite another story. Such is apparently the case for Danish golfer Soren Hansen.
Mr. Hansen is a professional golfer, and has played three events on the PGA tour (he mostly plays in Europe). He “moved” to Monaco in 1999 to take advantage of the principality’s low tax environment. However, his girlfriend is Danish, and he regularly visited her. He also apparently had a summer home in Hornbæk.
Denmark’s tax agency, SKAT, investigated Mr. Hansen. They believed he had moved in name only and that he had maintained many assets in Denmark. They also thought that Mr. Hansen was intentionally avoiding tax payments. The case went to trial in Copenhagen. The good news for Mr. Hansen is that he was found not guilty of intentionally avoiding tax payments. (Had he been found guilty, he was looking at a possible prison sentence.) However, he was found guilty of not paying back taxes of 8 million Kroner and given a fine of an additional 8 million kroner. At current exchange rates, that’s $2.7 million.
There’s a moral for this story, and it has to do with how expensive girlfriends can be…especially when they’re in another jurisdiction.