Berlusconi defends use of Malta-based company to trade in TV rights

This was declared by Berlusconi's senior fiscal consultant Stefano Morri, during a court hearing in Milan yesterday, where he stands charged with tax fraud by trading Mediaset television rights through International Media Services (IMS), registered with the Malta Financial Services Authority (MFSA).

Berlusconi stands accused alongside former right hand man Fedele Confalonieri, a former chief executive at Mediaset.

During the sitting, Morri explained at length the functions of the Malta-based company, and how television rights were bought and sold.

The renowned fiscal consultant explained how the setting up of IMS was "merely a cost-containing exercise and not tax avoidance".

Morri added that the company traded under Maltese law, profits were declared and taxes duly paid.

Trading in television rights is a highly complex exercise which entails lengthy negotiations and accounting, which is also spread over numerous jurisdictions, while also involving different currencies.

Morri stressed that Berlusconi and Confalonieri were legally and technically correct to set up IMS in Malta, and added that given the company had also contributed to increased dividends for all Mediaset shareholders.

Guglielmo Maisto - another consultant - spoke about the double taxation agreements between Malta and Italy, and the mechanics of how tax is paid by a company which operates in one state but provides services to another.

The trial was adjourned for 2 April.