Icelandic band Sigur Ros are set to appear in court in Iceland on January 5 as part of an investigation over tax evasion which their British manager, Dean O’Connor, says exemplifies the “very aggressive” nature of Iceland’s current tax penalty system.
The court date culminates a five-year period, during which time Sigur Ros have settled a bill for unpaid taxes, following an accusation of tax evasion by Iceland’s directorate of Internal Revenue (The RSK).
Sigur Ros claim that these missed payments were the result of errors made by the band’s former accountant for the period 2011-2014, who started working for them at business management giant PricewaterhouseCoopers before operating under his own firm.
Alongside O’Connor, Sigur Ros’ members have fully cooperated with the RSK investigation and now paid back 150% of what they owed Iceland’s government in missed tax.
However, they have also been legally pursued by the Icelandic District Attorney for the same case, which will be heard in court in January.
O’Connor tells us that while tax evasion — a charge Sigur Ros strongly deny — can’t be proven, if the band are found guilty of gross negligence over their taxes, Iceland’s District Attorney takes the 150% they’ve already paid back and multiplies it by a minimum of 200%, resulting in an additional and sizeable fine.
“The potential fines are ruinous — the boys would lose their homes.”
dean o’connor, sigur ros manager
“The potential fines are ruinous — the boys would lose their homes,” he says. “They certainly don’t have that kind of cash to be able to say, ‘Well, I’m going to pay these fines and stay where I am,’ they would all need to liquidate property.
“[The Icelandic government] obviously want to make an example of Sigur Ros — if we can catch these guys doing things wrong, then everybody else should be warned. It’s very aggressive; when you look at the sheer scale of the fines you’re talking about, they seem so arbitrary, so out of sync with what the [band have] actually done.
“The boys as musicians in Iceland have never really felt valued, and it’s a shame really. They’ve done so much to promote Iceland over the last 20 years, it’s obvious to anybody that understands what the band do. I don’t think they would be aggressively pursuing them in such a way if they had been valued more.”
This so-called double-jeopardy tax prosecution is currently under scrutiny in Iceland and the pursuit of new cases has been paused after concerns were raised about the fairness and legality of the practice. However, ongoing cases are still being pursued.
“It feels like for the last five years, this is what we’ve been working for,” O’Connor says. “Everything ground to a halt in terms of how you would live normally as a result of having this huge overhead fighting this case. First it was reparation — making good, as it were, for a period of time. And we’ve never had anything go wrong [with the band’s taxes] before and never since.
“We’ve run international businesses since the very beginning of the band’s career in both America and the UK, and we’ve never had issues there either. The problem in Iceland was that, as loyal Icelandic citizens, they always wanted to pay their taxes there and so all of their business channels ultimately ended in Iceland.
“In iceland, you are wholly dependent on professionals that don’t really have the experience needed to run a career as substantial as Sigur Ros’ has been.”
“Unfortunately for me, I don’t speak Icelandic, none of the professionals around the band outside of Iceland speak Icelandic, and there isn’t really much of the music industry in Iceland either. So you are wholly dependent on professionals that don’t really have the experience needed to run a career as substantial as Sigur Ros’ has been.
“There lies the crux — we were dealing with an accountant that probably didn’t understand everything he needed to understand, plus I’m convinced he was dealing with his own sets of issues at the time.”
In court, where the band will appear alongside their former accountant, O’Connor says the likelihood of being found guilty for gross negligence is “very high.”
He continues: “Unless we can have the system changed from within between now and January, I think that it’s unlikely that we will get the result that we need.”
If the court doesn’t rule in their favour, the band plan to appeal.
As a result of this experience, O’Connor urges any managers working with an international client from a country with a local language to try and internationalize their business quickly.
“if there was a big mistake that I made, it was not getting the band’s business out of a small country like iceland faster.”
“You need to get the business out of a small country like Iceland; if there was a big mistake that I made, it was [not doing that faster].
“We’ve spent the last few years extracting our business from Iceland and moving things from one place to another because it’s just safer — the oversight is safer, the knowledge base is greater, and it’s so much easier to run the business, whether that’s in America or in the UK.”Music Business Worldwide