The former Belgian prime minister sat on the board of shipping firm Exmar, which used an offshore company mentioned in the recent leaked documents about avoiding tax rules through offshore investments.
Mr Verhofstadt was on the board of directors between 2010 and 2016 and took home around £53,000 (€60,000) per year, according to Exmar’s annual reports.
The Paradise Papers mention Exmar Offshore in Bermuda, part of the Exmar Group.
Established in 1997, Exmar Offshore provides energy services and according to its CEO Niclas Saverys, is a “dormant company”.
What are the Paradise Papers?
The revelations about Mr Verhofstadt, who has made no secret of his dismay towards Brexit, were made public by Belgium’s far-left Workers’ Party on Tuesday evening.
Peter Mertens, president of the Workers’ Party, said Mr Verhofstadt “can’t claim he wasn’t aware of the existence of this [Bermuda-based] company”.
He said: “The activities of Exmar Offshore Ltd. were in the consolidated accounts and he received €60,000 as director to know this.”
In response, a spokesman for the Liberal group leader in the European Parliament emphatically denied any wrongdoing.
Bram Delen said: “This is fake news in the purest sense of the word.
“Exmar Offshore engages in activities that are literally ‘off the coast,’ such as platforms in the sea, which has nothing at all to do with offshore in the fiscal sense of the word.
“The PvdA [Workers’ Party] deliberately creates confusion on the basis of misleading definitions. On top of that, Verhofstadt has left the board of the company more than a year ago.”
The Paradise Papers, leaked earlier this month, is a collection of documents which allegedly reveal how politicians, celebrities, tech companies and other millionaires use off-shore tax havens.
The leak compromises 13.4 million files measuring 1.4TB – the second largest-ever data leak after the Panama Papers.
About half of the documents (6.8 million) relate to offshore legal service provider Appleby and corporate services provider Estera – which was part of Appleby until last year.
The papers were obtained by the German newspaper Süddeutsche Zeitung, which also sourced last year’s Panama Papers leak.
Among those named in the Paradise Papers include the Queen, Donald Trump’s Commerce Secretary Wilbur Ross, and U2 frontman Bono.