Billionaire Wise co-founder fined nearly $500,000 by UK tax collectors
28 Sep 2021
Kristo Kaarmann, Co-Founder & CEO, TransferWise, on Centre Stage during day one of MoneyConf 2018 at the RDS Arena in Dublin. (Photo By Eóin Noonan/Sportsfile via Getty Images)
Eoin Noonan | Sportsfile | Getty Images
LONDON — The co-founder of $15 billion fintech start-up Wise has been slapped with a £365,651 ($494,951) fine by British tax collectors for deliberately defaulting on his tax bill.
Kristo Käärmann, who is Wise’s CEO, was dealt the penalty after being late to submit his personal tax returns during the 2017/18 tax year.
His tax bill for that year was £720,495, according to Her Majesty’s Revenue and Customs.
“We are able to publish the names of those penalised under civil procedures for deliberately defaulting on certain tax obligations,” an HMRC spokesperson told CNBC, without commenting on the specifics of Käärmann’s case.
“This is about influencing behaviour by encouraging defaulters to engage with HMRC.”
A spokesperson for Käärmann told CNBC that the Estonian-born billionaire “has since devoted more time to keeping his personal admin in order.”
“Kristo was late submitting his personal tax returns for the 2017/18 tax year, despite sufficient reminders from HMRC,” the spokesperson said.
“His tax returns have since been completed, and he paid substantial late filing penalties.”
The news was first reported by The Telegraph newspaper.
Founded by Käärmann and fellow Estonian entrepreneur Taavet Hinrikus in 2011, Wise is now considered a darling of the British tech scene.
Formerly known as TransferWise, the money transfer company went public in a blockbuster market debut in July which valued it at more than £8 billion.
The firm’s shares have continued to rally since, climbing nearly 40%. At Wise’s current share price, Käärmann is worth approximately £2.1 billion on paper.
News of the tax violation weighed on Wise shares Tuesday. The stock was last trading down about 3%.
According to The Telegraph, Käärmann’s tax default could breach U.K. rules which say that public company directors must be free from conflicts between duties to their employer and private matters.
The Financial Conduct Authority can also revoke an executive’s approval to carry out their role if they fail to comply with standards of honesty, the newspaper said.
“We are unable to comments on individual firms but we do consider information of this type in our ongoing supervision,” a spokesperson for the FCA told CNBC.