Bernard Grech raked in undeclared €32,000 from hosting foreign students

Nationalist Party leadership hopeful Bernard Grech hosted English-language students at his house for at least five straight years during which thousands in income was never declared to the tax authorities.

MaltaToday has confirmed that a 2018 investigation by the Tax Compliance Unit found that Grech was in receipt of over €32,000 in gross income from hosting students from a school that was not even registered with the Malta Tourism Authority.

It is the latest in revelations of the family lawyer’s unexplained tax history, with previous reports in MaltaToday, Illum and The Times confirming that Grech had been in default for 12 years between 2005 and 2016, having not submitted adequate tax returns.

The tax probe found that Grech had received income from the hosting of foreign students from Home Language International School, which was found not to have been registered with the Malta Tourism Authority. This meant that technically, the income might not be applicable to income tax rules related to the hosting of students. But the tax probe was clear that income generated from the activity had to be included in the assessment.

The analysis carried out allowed Grech to factor in the costs incurred for accommodation and food expenses, so it applied a 50% reduction from the gross income, revealing a net profit from hosting students of just over €16,000 made between 2012 and 2016.

Asked to comment about why he had never declared his income from hosting students – which was only made evident in the TCU probe – Grech insisted with MaltaToday that he had “exhaustively explained his tax position” and that he had settled his tax and VAT dues.

Grech recently published a compliance certificate issued by the Commissioner of Revenue confirming he had settled his liabilities, and that this included the income derived from hosting foreign students.

Although Grech has so far not explained why he had been in default for long periods in his professional career, spanning from the 1990s onwards, he told MaltaToday he had already paid more than he was due by retracting his objections to the tax assessment.

“Bernard Grech firmly believes that since politicians are judged by higher standards, he ensured that before entering politics, no pending liabilities subsisted, in order to fulfil his values of political transparency and correctness. In fact he voluntarily chose to pay more than any ordinary citizen would do by retracting his right at law and settling the whole amounts due even if these were still under remission,” a spokesperson for Grech told MaltaToday.

Last week a spokesperson for Grech said that he had disclosed the details of his tax probe to a due diligence panel as part of the process for running in the PN election against incumbent leader Adrian Delia.

The spokesperson said all amounts after self-adjustments by Grech were settled before the end of October 2018.”

Grech settled €30,000 in dues the day after MaltaToday revealed the extent of his undeclared tax payments. A separate payment of €17,000 was made to settle the assessment.

The 2018 probe, which focused on the five-year period between 2012 and 2016, estimated some €43,000 had been under-declared income. At the end of the audit, Grech was presented with VAT dues of over €17,000.

Even Grech’s rival Adrian Delia has had to face up to tax problems that resulted in an €81,000 settlement with the tax authorities.