Top Spanish real estate vertical has emphatically refuted the suggestion that it shifted a part of its company’s tax liability from Spain to Luxembourg in the wake of its purchase by Apax Partners in 2015.

“We pay more tax (in Spain) than Google, Microsoft, Amazon and Twitter combined,” Fernando Encinar, Idealista’s co-founder and head of marketing and communications told the AIM Group.

Fernando Encinar

Fernando Encinar

Idealista has long held top or joint-top spot in property classifieds in Spain, and also operates in Portugal and Italy.

Since it is privately held, unlike rival which is part of Schibsted Spain, solid financial figures are hard to come by — which can lead to speculation. The hint that Idealista sought a tax shelter came from an El Confidencial article.

It reported that after Apax Partners bought out Idealista’s three main investors – Tiger Capital, Bonsai Venture Capital and Kutxabank – for an undisclosed sum (rumored to be around 150 million or $163 million U.S.), the co-founders Fernando and Jesus Enciner and Cesar Oteyza sold their remaining shares to Ivory Bidco SA.

According to the newspaper report, the company is a subsidiary of Ivory Spain, which is in turn owned by Ivory Topco, “a Luxembourg company created ‘on purpose’ by Apax Partners to reduce its tax liability”.

This ownership chain bears a resemblance to arrangements used by Amazon, which until this year funneled its Spanish profits through a Luxembourg account, and Twitter, which has been accused of using its Irish headquarters to avoid paying tax in Spain. But Encinar is adamant that the El Confidencial story reached for the wrong conclusion: “I want to be absolutely clear,” he said. “Idealista pays all its taxes in Spain. We have for the past 15 years and we will continue to do so.”

He also clarified the article’s claim that in 2015 wages and salaries earned by members of the board of directors and senior management “amounted to €10.95 million” and that “Idealista didn’t pay any remuneration to its board of directors [meaning that] almost €11 million went into the pockets of the Encinar brothers and Oteyza”.

The figure came from records regarding the Apax Partners purchase. “I can confirm this was not a special bonus the three of us shared,” said Encinar. “Every single worker in Idealista received a bonus [based on] their time with the company. For us, one of the important things about the deal was that everyone at Idealista got a bonus.”

The larger issue in this story is the growing complexity of the classified industry. Classifieds were local and specific. Time and technology transformed the industry to the point where leading brands cover multiple territories and fall under the auspices of different tax and legislative frameworks.

For established companies, such as Idealista, the simplicity and integrity of maintaining a single national tax base is paramount. However, young companies that expand rapidly, or launch simultaneously in multiple territories, face complicated legal and ethical decisions.

Advocacy groups, such as European Tech Alliance, have begun to address some of the issues facing classifieds and peer-to-peer platforms, but there is clearly more work to be done, both by the classified industry and by legislators.

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