Estonian tax system: how to make millions euro of it

There is no doubt that everyone wants to live in a wealthy country, with great social benefits. It is not a secret that country’s prosperity is guaranteed by not only its intelligent citizens, but mainly by the budget which is eked out by taxes. Taxes go on welfare payments, public debt service, improvement of social facilities and resort services and much more. For this reason, creation of new companies and businesses revitalizes the economy making it more competitive.

Now it becomes clear why many developed countries aspiring to prosperity classify taxes evasion as an economic crime. However, some dishonest businessmen manage to wriggle out of paying taxes. A notorious story about Bienvenue (previous name Complus Consulting OÜ), an Estonian company that promised to create 700 job places (only think about this figure - 700 people!) ended on a dull note leaving people without much-awaited jobs, creditors – without their money, and country – without taxes. We have previously blogged about how that all started. Now let us get into the details, as they will shed the light on quite an interesting story.

A French businessman Laurent Descharreaux came to Estonia, promised to build a huge corporation Complus Consulting OÜ, got subsidies from the government and loans from the local banks. He made everything possible to create a good picture of himself in the media and make a fuss about a bright future of his start-up in Estonia. He was so successful in this that he had got words of support from the social affairs minister of Estonia. Not only he arranged subsidies for the firm of the international scammer laurent Descharreaux but he also had publicly spoken up for him and his venture.

But soon after getting subsidies from the governmental organization and loans from local banks, which were obviously motivated by such an attention from the authorities (particularly the minister of social affairs who decided to give his words of support to the scam company publicly through local media), the firm left its offices and was renamed leaving no traces and contacts for anybody. Laurent Descharreaux renamed the company from Complus Consulting OÜ to Bienvenue OÜ. There is a very interesting fact: his Bulgarian entity had the same name (Complus Consulting BG EOOD) and we have the information that it processed quite big amounts of money through Bulgarian banks, so it’s easy to guess why Estonian Complus Consulting was renamed… to break the link between two entities, one of which most likely laundered money of Estonian taxpayers, and the second one was used as a trap for money with corrupted Bulgarian climate to absorb this dirty money vanished out from Estonian taxpayers.

When the time came, and lenders didn’t get any payment, and authorities didn’t get any report, they started court proceedings against Complus Consulting, which at that time had already been renamed to Bienvenue. This turned to the insolvency case, as there was no money and no one to ask it from. The fact that Complus Consulting OÜ, and later Bienvenue OÜ, had never filed any tax returns, even in the year when it got subsidies from the government, never was an obstacle for the minister of social affairs of Estonia to give public words of support to Descharreaux. This is unclear what was the motivation for the minister to personally support a scam project but it looks they both did well after that: Descharreaux was left untouchable and ran to Bulgaria while the minister of foreign affairs... became minister of justice! What a word - "JUSTICE"! Something that is always far away from international scammers like Laurent Descharreaux.

What happened next is really surprising. The court closed Bienvenue insolvency proceedings started by the Estonian tax office because... the company was deleted from the registry! Now, think again, the company that owes hefty amount to the government was simply deleted from the registry. Is that what usually happens? And the reason why the company was de-registered is simple: it did not file its financial reports to the Registrar. But before de-registration it is needed to get consent from the tax authorities which was actually given. The tax authorities that must act to collect the taxes from companies even did not try to do this and turned the blind eye to Bienvenue’s debts to the government! It seems strange and even illogical, from one point of view though. If we suppose that tax authorities did this on purpose or even that the owner of Bienvenue, Laurent Descharreaux, and the tax authorities were hand in glove, it all can make sense.

So, Bienvenue just fell of the edge of the earth and no one even questioned how and why the company which still owes huge amounts to its creditors metaphorically dissolved into thin air. Obviously, if you lend money, you suppose to get it back, don’t you? And if this does not happen amicably, you try to restore justice by any available means. Face the music, this how they say, right?

Certainly, imperfection of Estonian law system smoothened things down for Descharreaux. But do you think a foreigner could succeed in such a game without local sidekicks? How come that one hand of the tax office tries to get money from the debtor and another gives a consent to delete it from the registry? Do ministers in any country of Europe give subsidies to a dummy firm, which never files any report, and publicly speak for it spurring banks to give loans? Isn’t it corruption in the country where, according to the European Commission survey, its level is considered to be low?