THE TRANSATLANTIC MAGAZINE
THE TRANSATLANTIC MAGAZINE
Santa Claus’ globe-trotting means his tax affairs are among the world’s most complex, says leading audit, tax and business advisory firm, Blick Rothenberg. Tomm Adams, a Partner at the firm, explained:
“Tax regulations are becoming ever more complex, but so are the situations our internationally-mobile clients find themselves in. If you are resident in one location but working in another, you will probably need to be paying taxes in two locations at once – although you will usually be able to offset one set of liabilities against the other.
“Take Santa Claus as a great example. Although Mr Claus remains silent in public about his personal tax affairs, I expect he has one of the most complicated sets of tax filings in the world. Given his very public persona, he would do well to make sure his robins are in a row.
“Mr Claus appears to be resident in Lapland, a northern region of Finland. Assuming he operates as a sole trader, he’ll be taxed at Finnish rates of up to 55%. I’m surprised he hasn’t looked at relocating to somewhere more favorable – and perhaps with slightly warmer winters. Perhaps Dubai – with zero tax – or Italy, which has a number of attractive regimes for new residents.
“Of course, we wonder what exactly his source of income is. Setting aside any inheritance and gift tax complications, he certainly isn’t generating direct revenues from delivering free toys in nearly 200 tax jurisdictions. I assume his revenues come from payment for his appearances in shopping malls, grottoes and even TV appearances worldwide.
“Most countries will look to tax their share of Mr Claus’s profits based on his appearances there. That’s a lot of tax filings, all with different deadlines, and interactions with his Finnish taxes. Mr Claus’s cashflow is probably bumpier than a snowy sleigh ride.
“Could Santa be missing anything in his tax planning? Mr Claus would do well to take some professional advice – at least to make sure he is meeting his obligations in each jurisdiction. He should keep records of all costs incurred in the course of carrying out his trade: materials for the toys, elf wages, and even carrots for the reindeer. However, fines for illegal parking of sleighs are unlikely to be deductible.”
Tomm summed up: “While much of the world is winding down for the festive period, do spare a thought for those in their busiest periods, like Santa Claus and his elves, as well as tax accountants, all working to wintry deadlines.”
