Portugese authorities have charged Brazil's national coach Luiz Felipe Scolari with tax fraud, less than a month before the World Cup starts, a prosecution spokesman told AFP on Wednesday. (Click here for latest on Football)
Scolari is accused of hiding about seven million euros ($9.6 million) in income when he was Portugal's coach between 2003 and 2008, according to media reports.
He has strongly denied any wrongdoing. But the inquiry threatens to taint Brazil's preparations to host the World Cup, which starts on June 12.
Scolari coached Brazil to their World Cup triumph in 2002 and has returned to the national side for the campaign on home territory which they are favourites to win.
Portugal reached the World Cup semi-finals in 2006 when Scolari was in charge. (Also read: Suarez, Cavani may not be enough for Uruguay)
The Portuguese inquiry is being carried out by the Central Department for Criminal Investigations and Prosecutions.
Dutch newspaper Financieele Dagblad said that Scolari received money from two Netherlands-based companies, Chaterella Investors Limited and Flamboyants Sports.
Portugal has asked US authorities for assistance in the inquiry as the money was believed to have been transferred to the United States, the Dutch daily added. (Related: Nasri left out of France squad)
Financieele Dagblad said that Scolari transferred money through companies based in the Bahamas and other tax havens. "I made all my income tax declarations correctly," Scolari said in a statement in reaction to the press reports.
"I always declared my earnings in all the countries I worked in," he insisted. (Read: Tevez excluded from Argentina squad)
"I am absolutely convinced of the correctness of my declarations.
"If there is something wrong it is not of my doing," said Scolari, who invited the authorities to look into "all the facts."