Dorna Sports and Two of Its Executives Fined for Tax Evasion

Dorna Sports and its top executives fined heavily 1 photo
Photo: Dorna
Dorna Sports, CEO Carmelo Ezpeleta and CFO Enrique Aldama have been found guilty of tax evasion by the Spanish Supreme Court and will have to pay millions of Euro in fines. The court ruled that multiple offenses occurred between 2003 and 2006, and issued no less than 12 sentences.
The lower court initially sentenced Ezpeleta and Aldama together with their spouses to pay €5.1 million and €1.2 million ($5.54 mil and $1.3 mil, respectively) in fines, but the Supreme Court reviewed the sums and made amends. Carmelo Ezpeleta's fine was reduced to €3.9 million ($4.23 mil) while that of Enrique Aldama went up to €2.7 million ($2.93 mil).

The two Dorna executives were found guilty of simulating the sale of shares to reduce the base for the calculus of income tax. Dorna shares have been sold to another company that was also owned by the two. The Spanish company defended itself claiming that the process was not intended as tax evasion, but as leveraged recapitalization, but the Supreme Court did not agree with this.

The court ruled that the financial scheme applied in this case was clearly intended to conceal a taxable income and that, between 2003 and 2006, the corporation tax to be paid was improperly declared.

At the same time, the judges said that the actions were not fraudulent in nature, thus reversing the ruling of the lower court. The initial €17.6 million ($19.12 mil) fine will also be revised, most likely downwards, as an effect of the lesser "criminal character." However, more fines are to be calculated for the infringement of the tax code, with the settlement sums most likely to go up.

Dorna declared they would seek all the methods to appeal the sentences, maintaining their claim on the leveraged recapitalization and dissenting the serious criminal intent as described by the court.

This is what a Dorna Sports press release reads:

"Despite holding the Decisions of the Courts in the highest regard, Dorna would like to express its disagreement with the content of the Decision of the Supreme Court regarding the classing of the 'leverage recapitalization' transactions performed in 2003 and 2004, from the tax law perspective, as simulations. Transactions of this kind are commonplace in the economies of neighboring countries and are perfectly valid from the corporate law perspective. The fact that they are not to be classed as simulations is acknowledged by several Supreme Court justices, who have made known expressly their disagreement with the content of the judgements by expressing dissenting opinions. Dorna is analyzing the possible ways in which these judgements might be contested."

It looks like Giovanni Cuzari is not the only one playing the tax game in the motorsport world...
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