When Tax Planning Goes Spectacularly Wrong
The use of offshore structures in international business remains one of the most contentious aspects of tax planning. On one hand, properly constructed cross-border arrangements serve legitimate business purposes—optimizing a group’s capital structure, protecting assets, planning succession, managing regulatory risk. On the other, the history of aggressive tax schemes involving offshore jurisdictions is littered with dramatic legal, financial, and reputational consequences. This essay revisits the most notorious cases in which offshore structures were challenged by tax and regulatory authorities, leading to billions in penalties, criminal prosecutions, and fundamental shifts in international tax law.
How DJ Tiësto and Afrojack Saved on Taxes with the Help of a Homegrown “International Tax Optimization” Specialist
The case of international tax advisor Frank Butselaar offers a textbook example of how even the most sophisticated offshore schemes collapse when they involve American taxpayers and the American tax system. Butselaar was sentenced to thirty months in prison and ordered to pay nearly fifteen and a half million dollars in restitution for helping high-income clients—including the world-famous DJs Tiësto and Afrojack—evade U.S. taxes.
Butselaar advised clients to create offshore structures while they were U.S. tax residents, then installed paper owners (typically family members living outside the United States) to create the appearance that his clients no longer controlled the offshore entities. Between 2012 and 2017, this scheme helped conceal more than seventy million dollars in unreported income. Despite warnings from six different professionals that offshore income was reportable in the United States, Butselaar continued the scheme.
The Butselaar case is particularly instructive for several reasons. First, it demonstrates a new level of international coöperation among tax authorities—the investigation was conducted by the J5 (Joint Chiefs of Global Tax Enforcement), a coordinated initiative of tax agencies from the United States, the United Kingdom, the Netherlands, Canada, and Australia. Second, it reveals that even sophisticated schemes using nominees are now effectively detected and prosecuted. Third, it demonstrates that tax advisors participating in illegal schemes face severe criminal sanctions, not merely administrative ones.
From the perspective of a Polish tax lawyer, the case carries an important warning for professionals advising on international structures. The boundary between aggressive but legal tax planning and tax crime is growing increasingly thin, and criminal liability for advisors is becoming ever more real. Contemporary practice requires not only deep knowledge of the rules but also awareness of the reputational and legal risks associated with advising on schemes that push the boundaries of legality. Additionally, the case shows that the use of nominees (or, to speak plainly, fronts) to hide the real beneficial owner is now treated as attempted fraud, not legitimate structural planning.
Panama Papers: The Fall of Mossack Fonseca and Global Consequences
The leak of documents from the Panamanian law firm Mossack Fonseca in 2016 represents an unprecedented event in the history of international tax law. The publication of more than eleven and a half million documents revealed offshore structures belonging to a hundred and forty politicians and government officials from more than two hundred countries. The consequences proved devastating—the firm’s founders, Jürgen Mossack and Ramón Fonseca, were arrested in 2017 on money-laundering charges related to Brazil’s “Lava Jato” operation. Panama’s attorney general described the firm as “a criminal organization dedicated to hiding assets or money from suspicious sources.”
The immediate political fallout was swift—Iceland’s prime minister resigned within days of the publication. The British Virgin Islands imposed on Mossack Fonseca a record fine for the jurisdiction of four hundred and forty thousand dollars for violations of anti-money-laundering regulations. Investigations were launched in fourteen countries, and governments collectively recovered more than one point two billion dollars in back taxes and penalties. After a trial that began in 2024, all twenty-eight defendants were ultimately acquitted due to problems with the chain of evidence and insufficient proof—though this doesn’t change the fact that the Panama Papers fundamentally transformed the approach to transparency of offshore structures worldwide.
From the perspective of a Polish tax lawyer, the Mossack Fonseca case illustrates a key problem with contemporary offshore structures—the illusion of confidentiality. The firm operated on the conviction that professional secrecy and Panamanian regulations would provide clients with absolute protection from disclosure. The reality proved brutal—a single leak destroyed the reputations of firms and individuals around the world, regardless of the legality of their structures. For Polish entrepreneurs planning to use offshore solutions, awareness is crucial: in the age of digitization and international coöperation among tax authorities, absolute confidentiality has ceased to exist.
Apple v. the European Commission: Thirteen Billion Euros in Back Taxes
The Apple tax case in Ireland represents one of the most important precedents regarding European state-aid law applied to tax rulings. The European Commission determined that Ireland granted Apple illegal state aid through tax rulings from 1991 to 2014, allowing the corporation to pay an effective tax rate of just 0.005 per cent. The scheme relied on the use of two Irish subsidiaries that formally held intellectual-property rights, but most profits were attributed to “head offices”—entities that existed nowhere for tax purposes.
After an eight-year legal battle, the European Court of Justice ruled in September, 2024, that Apple must pay Ireland thirteen billion euros in back taxes. The tribunal found that “Ireland granted Apple unlawful aid, which Ireland is required to recover.” Paradoxically, the Irish government opposed the Commission’s efforts, preferring to maintain its reputation as a business-friendly jurisdiction even at the cost of forgoing billions in back taxes.
The Apple case has fundamental significance for understanding the limits of aggressive tax planning in the European Union. First, the ruling confirms that the European Commission can use state-aid provisions to challenge individual tax rulings if they lead to excessive reduction of the tax base. Second, the judgment shows that even structures accepted by local tax authorities can be challenged at the E.U. level if they violate competition principles. Third, for international capital groups operating in Poland, the Apple case serves as a warning—tax rulings obtained in one jurisdiction are not eternal and can be challenged retroactively, leading to gigantic tax claims.
From the standpoint of Polish taxpayers planning structures using Irish companies, it’s crucial to understand that, after the Apple case, the era of the most aggressive schemes based on “head offices” without economic substance has definitively ended. Contemporary tax planning requires not only formal compliance with regulations but, above all, economic substance—real business operations, employment, assets, and functions in the jurisdiction where profits are taxed.
Google and the “Double Irish Dutch Sandwich” Scheme
Google pioneered one of the most aggressive tax-avoidance schemes—a structure known as the “Double Irish with a Dutch Sandwich.” In 2017, the corporation channelled twenty-three billion dollars in taxable income through this scheme. The mechanism involved shifting profits from the American parent company to an Irish subsidiary, then through a Dutch company (to avoid withholding tax), and ultimately to another Irish company registered in Bermuda, where taxes were virtually nonexistent.
According to Reuters, Google paid just three point four million euros in Dutch taxes in 2017 on reported profits of thirteen point six million euros, while simultaneously transferring nineteen point nine billion euros to Bermuda. The corporation allegedly paid only single-digit percentage taxes on profits earned outside the U.S. for over a decade. After intense international scrutiny and Ireland’s closure of the “Double Irish” loophole for new structures in 2015, Google announced in 2020 that it would stop using this scheme.
The Google case has particular significance for understanding the evolution of international tax law. The “Double Irish Dutch Sandwich” structure was entirely legal for years—it exploited differences between the tax systems of various jurisdictions and a loophole allowing a company to be registered in Ireland while being managed from Bermuda. Only international pressure, including O.E.C.D. initiatives to combat base erosion and profit shifting (BEPS), led to the closure of this possibility.
For Polish entrepreneurs, the lesson from the Google case is unambiguous—structures based solely on technical differences between tax systems, without real economic substance, are increasingly risky. Contemporary international tax law is evolving toward taxation where value is actually created, not where intellectual-property rights or trademarks are formally registered. Polish companies planning international expansion must build structures based on real business operations, employment, and economic substance, not purely formal optimization.
Credit Suisse: Repeated Tax Crimes
The Credit Suisse case represents an almost textbook example of how years of systematic violations of tax regulations can lead to catastrophic legal and reputational consequences. The bank was embroiled in two major offshore scandals. In 2014, Credit Suisse pleaded guilty and paid two point six billion dollars for helping American taxpayers file false tax returns. However, authorities discovered that Credit Suisse “committed new crimes and violated the May 2014 settlement.”
In May, 2025, Credit Suisse Services AG (now owned by UBS) again pleaded guilty to conspiring to hide more than four billion dollars from the I.R.S. on at least four hundred and seventy-five offshore accounts between 2010 and 2021. Prosecutors revealed that Credit Suisse bankers “falsified documentation, processed fictitious gift documents, and maintained over one billion dollars in accounts without tax-compliance documentation.” The bank paid more than five hundred and eleven million dollars in penalties, with an additional nonprosecution agreement covering undeclared accounts worth over two billion dollars maintained at Credit Suisse AG Singapore.
The Credit Suisse case illustrates a fundamental shift in law enforcement’s approach to tax crimes committed by financial institutions. After the 2008 financial crisis, regulators—particularly American ones—adopted a zero-tolerance approach toward banks actively participating in tax evasion. The second settlement is crucial—it shows that even after pleading guilty and paying billions in penalties, continuing forbidden practices leads to even harsher sanctions.
From the perspective of a Polish legal advisor, the Credit Suisse case carries an important message for clients considering the use of foreign financial institutions for offshore structures. The era of Swiss banking secrecy has definitively ended—Swiss banks now actively coöperate with tax authorities worldwide under automatic exchange of tax information. Attempts to hide offshore assets from Polish tax authorities are not only unlawful but, above all, highly risky, as the probability of detection is now extremely high. Banks themselves often initiate disclosures to tax authorities to avoid criminal and regulatory liability.
UBS and the Collapse of Swiss Banking Secrecy
The 2009 UBS case represents a historic moment in international tax law—the moment when Swiss banking secrecy, treated for decades as inviolable, suffered fundamental weakening. UBS, Switzerland’s largest bank, entered into a deferred-prosecution agreement after being accused of conspiring to defraud the United States by impeding the work of the I.R.S. The bank agreed to pay seven hundred and eighty million dollars in fines and disclose the identities of certain American clients holding undeclared accounts.
According to prosecutors, UBS helped American taxpayers open new accounts in the names of “nominees” (read: fronts) and shell entities to avoid reporting requirements. The settlement required UBS to disclose information about forty-four hundred and fifty of the largest accounts belonging to U.S. citizens suspected of tax evasion. This unprecedented step by Swiss authorities represented a significant breach of historically sacred Swiss banking secrecy and triggered a wave of voluntary disclosures by American taxpayers with undeclared offshore accounts.
The UBS case had a domino effect on all international tax law. First, it showed that even the most legally protected jurisdictions must yield to international pressure, especially from the United States. Second, it created a precedent for voluntary-disclosure programs in dozens of countries, including Poland. Third, it was a direct catalyst for the creation of FATCA (Foreign Account Tax Compliance Act) and the global standard for automatic exchange of tax information (Common Reporting Standard).
For Polish taxpayers holding or planning offshore structures, the UBS case carries a key message—the era of anonymity has definitively ended. Currently, virtually all jurisdictions, including traditional tax havens like Switzerland, Luxembourg, and Singapore, automatically exchange information about bank accounts with Polish tax authorities. Attempting to hide offshore assets not only exposes one to criminal liability for tax crimes but is simply ineffective. Contemporary legal tax planning using foreign structures requires full transparency and reporting of all foreign structures and accounts in accordance with controlled-foreign-corporation (CFC) regulations and information obligations.
Amazon and Luxembourg Tax Arrangements
The European Commission opened an investigation in 2014 into Amazon’s tax arrangements in Luxembourg, alleging that the company received illegal state aid. The Commission determined that Amazon’s Luxembourg subsidiary recorded most of the group’s European profits but paid royalties to another Luxembourg entity, significantly reducing its taxable profits. Commissioner Joaquín Almunia stated that most of Amazon’s European profits “are recorded in Luxembourg but are not taxed in Luxembourg.”
Despite the Commission’s initial 2017 decision requiring Amazon to pay two hundred and fifty million euros in back taxes, the E.U. General Court ruled in 2021, and again in 2023, that Amazon did not benefit from illegal state aid. The court defeats highlighted the limitations of the E.U.’s case-by-case approach to examining tax rulings. Nevertheless, in 2021, Amazon’s European operations generated fifty-one billion euros in sales but paid no European income taxes.
The Amazon case illustrates a fundamental weakness of the European corporate-taxation system—the lack of harmonization and coördination among member states. Luxembourg, like Ireland and the Netherlands, deliberately pursues a policy of attracting international corporations through preferential tax treatment. The European Commission attempts to combat this phenomenon using state-aid provisions, but with limited litigation success.
For Polish capital groups planning international expansion, the Amazon case carries an ambivalent message. On one hand, it shows that properly constructed structures using Luxembourg tax rulings can withstand even European Commission scrutiny. On the other, the reputational risk is enormous—Amazon regularly appears on lists of companies accused of aggressive tax avoidance, affecting consumer and regulator perception of the brand. Additionally, domestic provisions such as exit taxes, controlled foreign corporations (CFC), and the new global minimum tax (BEPS Pillar Two) are systematically limiting the effectiveness of such structures.
IKEA and the Dutch “Licensing Channel”
IKEA became a symbol of aggressive international structures using the Netherlands as a “channel for licensing fees” to shift profits to tax havens. The European Commission opened a formal investigation in December, 2017, into two tax rulings granted by the Netherlands to Inter IKEA. Between 2009 and 2014, IKEA potentially shifted more than one billion euros in profits through franchise-fee arrangements, where every IKEA store worldwide paid a 3-per-cent licensing fee to an entity headquartered in the Netherlands.
The Greens/European Free Alliance estimated that Inter IKEA avoided taxation on eighty-four per cent of fourteen point three billion euros in income from licensing fees received from IKEA stores globally between 1991 and 2014. These licensing fees were routed through the Netherlands and Luxembourg to Liechtenstein with minimal tax paid along the way. The investigation was still ongoing according to the latest reports.
The IKEA case is particularly interesting from the perspective of Polish tax law, as it touches on a fundamental issue—transfer pricing and licensing fees. IKEA’s structure was based on shifting the value of intellectual property (brand, know-how) to a Dutch entity, which then licensed these assets to all IKEA stores worldwide, including stores in Poland. The effect was that profits generated by Polish IKEA stores were partially “transferred” to the Netherlands through payment of licensing fees.
In Polish tax practice, such structures are now intensively scrutinized by tax authorities under transfer-pricing procedures. The key question is: Does the licensing-fee rate paid by the Polish store to the foreign entity correspond to market conditions (the arm’s-length principle)? Does the Polish entity actually receive economic value justifying such a high fee? Polish CFC regulations can additionally result in taxation of the foreign entity’s income in Poland if it’s deemed a controlled foreign company with passive income.
Facebook and the Transfer-Pricing Dispute
The I.R.S. challenged Facebook’s 2010 transfer of intellectual-property rights to Facebook Ireland Holdings, valued by the company at six point three billion dollars. The I.R.S. argued that the true value was approximately twenty-one billion dollars, ultimately setting its valuation at nineteen point nine billion dollars. In May, 2025, the U.S. Tax Court ruled largely in favor of the I.R.S., finding the valuation method used by the agency appropriate, though it rejected some assumptions regarding projections and requires recalculation of the final tax liability, which could reach as much as nine billion dollars with interest.
The case concerns whether Facebook understated U.S. income by selling rights to its Irish subsidiary too cheaply, thereby inflating income taxable in Ireland (with a corporate-tax rate of 12.5 per cent) while decreasing income taxable in the U.S. (minimum rate of thirty-five per cent). In 2016, Facebook’s Irish subsidiary reported twelve point three billion euros in revenue but paid only twenty-nine point five million euros in taxes. The trial revealed aggressive use of the “double Irish” structure before its closure.
The Facebook case is extremely important for understanding contemporary transfer-pricing challenges related to intellectual-property valuations. The problem is that determining the market value of unique intangible assets (in Facebook’s case—algorithms, user base, technology) is nearly impossible using traditional transfer-pricing methods. There’s no comparable market for transactions transferring the entire business model of a technology company worth hundreds of billions of dollars.
For Polish capital groups, the Facebook case carries a crucial lesson regarding the risk of restructuring transactions in which intellectual-property rights are transferred to foreign subsidiaries. Polish tax authorities, like the I.R.S., increasingly challenge such transactions, arguing that the valuation was understated, leading to artificial reduction of the tax base in Poland. The risk is particularly high when valuable brands, patents, or know-how are transferred to low-tax jurisdictions without adequate compensation. Contemporary safe planning requires not only professional valuation by independent experts but also economic justification for such restructuring that extends beyond mere tax benefits.
Enron and the Use of Special-Purpose Entities
Though not exclusively concerning offshore structures, the Enron scandal demonstrated how special-purpose entities (SPEs) in tax havens can facilitate massive fraud. Enron used hundreds of SPEs to hide debt and create fictitious revenue. The company created offshore SPEs in locations such as the Cayman Islands to circumvent accounting rules.
The Senate Permanent Subcommittee on Investigations determined that Enron used four SPEs called “Raptors” to justify omitting nearly one billion dollars in investment losses from financial statements. Enron also “sold” poorly performing assets to related entities while secretly pledging two point six billion dollars in Enron stock to secure loans. The scandal led to Enron’s bankruptcy in 2001 and the dissolution of Arthur Andersen, its auditor.
The Enron case, though primarily concerning accounting fraud, is important for understanding the risk of overly complicated offshore structures. Enron created such a complex network of special-purpose entities in various jurisdictions that even sophisticated auditors and regulators had difficulty understanding the company’s true financial situation. Offshore structures were used not so much for legal tax planning as for purely fraudulent purposes—hiding losses, artificially inflating revenue, and misleading investors.
From the perspective of Polish tax and business law, the Enron case serves as a warning against creating overly complicated capital structures. Complexity itself can be a signal to oversight bodies that something is wrong. Contemporary regulations on controlled foreign corporations (CFC), beneficial owners, and analysis of economic substance require that every element of an international structure have real economic justification. Entities that exist solely “on paper” without real operations, employment, or assets are now automatically treated as suspicious by both tax authorities and financial-market regulators.
Wirecard: Financial Fraud Using an Offshore Network
The German fintech Wirecard AG perpetrated one of the largest corporate frauds in history, using offshore entities to fabricate one point nine billion euros in assets. The company maintained a complex network of subsidiaries in tax havens, including Dubai and the Isle of Man, where it processed payments for questionable clients involved in gambling, pornography, and potentially money laundering.
Wirecard used offshore structures to hide the fact that purported transactions never took place. For example, the company claimed it processed three hundred and fifty million euros monthly through Al Alam Solutions, a one-person operation in Burj Khalifa in Dubai, for thirty-four key clients—transactions that a KPMG audit revealed were largely nonexistent. The F.B.I. also investigated whether Wirecard played a role in a hundred-million-dollar banking conspiracy related to an online marijuana marketplace. C.E.O. Markus Braun and C.O.O. Jan Marsalek orchestrated the fraud, with Marsalek allegedly fleeing to Russia.
The Wirecard case is particularly instructive because it combines the use of offshore structures with complete financial fraud. Unlike the Google or Apple cases, where structures were legally used for tax optimization, Wirecard used offshore entities for criminal purposes—creating fictitious transactions, falsifying documentation, and misleading auditors, investors, and regulators.
For Polish entrepreneurs and investors, the Wirecard case carries a warning regarding due diligence when working with foreign partners. For years, the company presented itself as an innovative fintech while in reality it was a gigantic fraud. The use of complex offshore structures and operations in poorly regulated jurisdictions (like Dubai) were warning signals that were ignored by regulators and auditors. Contemporary practice requires heightened vigilance toward business partners operating primarily through offshore entities, especially in high-risk industries like electronic payments, cryptocurrencies, or online gambling.
Petrobras and Operation Car Wash
Brazil’s Operation Car Wash revealed an extensive corruption network using offshore accounts and shell companies. For over a decade, Petrobras executives colluded with contractors to inflate prices by as much as 3 per cent, gaining at least two point one billion dollars, which were laundered through offshore accounts in the Bahamas, Panama, Switzerland, Hong Kong, Portugal, and the United States.
One Petrobras director redirected twenty million euros to personal accounts in Monaco from offshore accounts, while another director agreed to return a hundred million dollars stolen from the company and deposited in foreign bank accounts. The scheme involved Brazilian construction giant Odebrecht, which used “a complex network of shell companies, off-the-books transactions, and offshore bank accounts” to pay bribes in twelve countries. The investigation resulted in two hundred and ninety-two arrests and two hundred and seventy-eight convictions, spreading to at least fourteen countries, including Peru, Colombia, and Venezuela.
The Petrobras/Odebrecht case is the largest corruption scandal in Latin American history and demonstrates how offshore structures are used not so much for tax planning as for straightforward money laundering from corruption. These structures were criminal tools serving to hide the origin of illegal funds and their transfer between jurisdictions.
From a Polish perspective, the case is particularly important in the context of beneficial-owner regulations and anti-money-laundering provisions. Polish financial institutions and professionals (including lawyers, tax advisors, notaries) have an obligation to apply enhanced financial-security measures toward clients using complex offshore structures, especially when there are connections to countries with high corruption risk. Structures using “nominees” (fronts), multi-tiered shell companies in various jurisdictions, and transfers of funds between tax havens constitute classic warning signals of potential money laundering. Ignoring these signals can lead to criminal liability for professionals assisting in such transactions.
Conclusions: The Boundary Between Legal International Tax Planning and Tax Crime
The cases presented illustrate a fundamental shift in international tax law that has occurred over the past two decades. The era of absolute confidentiality of offshore structures has definitively ended—the Panama Papers, Paradise Papers, and other leaks demonstrate that no jurisdiction can now guarantee complete secrecy. Automatic exchange of tax information (CRS) and intensive international coöperation among law-enforcement agencies (J5) mean that the detectability of offshore structures is now extremely high.
Financial penalties have reached unprecedented levels—Credit Suisse paid five hundred and eleven million dollars, Apple fourteen billion euros, UBS seven hundred and eighty million dollars. Equally significant are criminal consequences—Mossack Fonseca’s founders were arrested, Wirecard’s C.E.O. was charged, numerous Petrobras figures were imprisoned. Perhaps most important, though, are reputational consequences—companies from Google to IKEA faced intense public scrutiny and government investigations lasting years after initial revelations.
The message for Polish entrepreneurs is clear: offshore structures themselves remain legal and can serve legitimate business purposes. Crucial, however, is adherence to three fundamental principles. First, transparency—all foreign structures and accounts must be properly declared to Polish tax authorities. Second, economic substance—every element of an international structure must have real economic justification extending beyond mere tax benefits. Third, transfer-pricing compliance—intragroup transactions must be conducted at arm’s length with appropriate documentation.
In the age of BEPS, CFC, the global minimum tax (Pillar Two), and enhanced scrutiny of beneficial owners, aggressive tax planning based solely on technical differences between tax systems is becoming increasingly risky. Contemporary legal international planning requires a holistic approach considering not only tax optimization but also economic substance, regulatory compliance, and reputational-risk management. Offshore structures can still play a valuable role in international capital groups—but only when they’re properly designed, appropriately documented, and fully transparent to the relevant tax authorities.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
