From Iceland — Haarde Legal Defense Fund Tax Exempt

Haarde Legal Defense Fund Tax Exempt

Published June 10, 2011

Money being donated to help former prime minister Geir H. Haarde’s legal team will not be taxed, an official from the tax office says.
As many are aware, Geir is currently on trial, facing charges of negligence and mismanagement during his time as prime minister, contributing to the 2008 bank collapse. By Icelandic law, a minister found guilty of these charges can face up to two years in prison.
Málsvörn, a group of supporters who recently opened a web page, have been collecting signatures and raising money for his defence fund. One of those supporters, Anna Kristín Traustadóttir, told Pressan that somewhere between 10 and 15 million ISK has already been raised.
This prompted Pressan to find out if Geir will have to pay taxes on any of this money. One expert they spoke to said that it depends on whether or not Geir is using the money to pay for costs he would normally have to cover, in which case, the funds should be taxed. Legal funds of this type are seldom taxed, he added.
However, government tax supervisor Skúli Eggert Þórðarson was conclusive on the matter, saying, “If people have such a fund they don’t pay taxes, that is if the money is not used.” In the event the money is used, it will be taxed, and anything remaining will go to charity.

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