Prominent defaulters in Tenerife come in all forms, but these two companies truly stand out.
Tenerife is renowned for its stunning and impressive diversity, but behind this beautiful façade lies a darker side: companies that appear year after year on the national list of defaulters. Playa Las Teresitas SA and Tenerife Development Company SL are two prominent examples of businesses that have long been plagued by fiscal problems. What began as lucrative real estate deals ended in tax evasion and millions of euros in outstanding debts.
Notorious defaulter
Playa Las Teresitas SA was originally the owner of the popular coastal area at Playa de Las Teresitas in Santa Cruz de Tenerife, until the land was sold in 1998 to the company Inversiones Las Teresitas (ILT). In this transaction, worth around 33 million euros, the directors played a cunning game to avoid taxation. The scheme was carefully designed by Mauricio Hayek, then advisor to the board, who ensured the proceeds of the sale were channelled personally to the individual board members, thereby avoiding corporate tax.
However, this scheme did not go unnoticed by the Spanish tax authorities, Hacienda. Since 2015, the company had been listed with an outstanding debt of over 12 million euros. Through lengthy legal proceedings and negotiations, this debt has since been reduced to 6.2 million euros. Nevertheless, the company remains a notorious name on the list of defaulters and has become a symbol of mismanagement and fiscal trickery in Tenerife’s real estate sector.
Substantial arrears
The involved directors did not escape unscathed. Over the years, they received various fines and tax surcharges that amounted to as much as 11 million euros. This is because the judiciary repeatedly ruled that there was deliberate fiscal deception. The situation received extensive coverage in local and national media, seriously damaging the reputation of Playa Las Teresitas SA.
At the same time, Tenerife Development Company SL also remained prominently present on the same list of defaulters. This company was responsible for developing the luxurious real estate complex Las Adelfas, located in San Miguel de Abona in southern Tenerife. In the 1990s, the company built 82 bungalows, five commercial properties, and several parking spaces, which were sold for substantial profits.
But here too, fiscal complications were not lacking. The investors of Tenerife Development Company SL systematically failed to report the income from these real estate transactions to the tax authorities. Specifically, it concerned revenues from the sale of properties between 1995 and 1997. By deliberately not submitting the required corporate tax returns for these years, substantial arrears arose with the tax office Hacienda.
Lawyer fined
What followed was a years-long battle between the Spanish tax authorities and the company. The original debt of 1.4 million euros was, thanks to prolonged legal procedures, reduced to just under one million euros (994,000 euros). Still, the issue is far from resolved: the company returns every year on the list of defaulters, and the battle to collect these taxes continues unabated.
The situation was further complicated by the fact that the main investor of Tenerife Development Company SL has been living abroad for many years. This made it more difficult for the authorities to effectively recover the owed sums. Eventually, the Spanish authorities targeted the investor’s lawyer, who in 2010 was fined 1.7 million euros. In a later court case, an additional fine of one million euros was added.
Questionable credibility
Spanish courts were clear in their rulings: there was compelling evidence that Tenerife Development Company SL had committed tax fraud by failing to pay corporate tax for years. Various court rulings confirmed that the company had consciously neglected these obligations, with significant financial consequences.
Both cases—that of Playa Las Teresitas SA and Tenerife Development Company SL—illustrate a larger problem of tax evasion and fraud in Tenerife’s real estate sector. While the island economically thrives thanks to tourism, the shadow of such financial crimes sometimes calls into question the credibility of local businesses and executives.
National list
Despite numerous legal measures and fines, collecting outstanding taxes from the prominent defaulters in Tenerife remains a challenge. The companies symbolise the complex interplay between property development, financial gain, and tax regulations in Tenerife. For the authorities, ensuring that even powerful companies and influential individuals meet their tax obligations remains a constant challenge.
Only time will tell whether the Spanish tax office will ultimately be able to resolve this long-standing fiscal battle, and whether these prominent names will ever disappear from the infamous national list of defaulters.
Guy Devos © AI Illustration
Prominent defaulters in Tenerife ©
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