(The following is a Google translation of the original press release, which was written in Spanish and can be viewed here: http://www.poderjudicial.es/portal/site/cgpj/menui…)

The Supreme Court confirms that Dorna Sports will pay to the Treasury to simulate a sale for tax benefits

The Contentious-administrative notes that must also pay a financial penalty

Chamber III confirms that Dorna Sports and two of its executives simulated in 2003 and 2004 a sale of shares to obtain tax advantages and a cast of undercover dividends, so, apart from having to deal with the tax assessments of companies and corresponding income tax (Hacienda initially calculated an amount of 25.5 million euros [$27.7 million] with interest on late payments, which will have to be corrected slightly downwards) committed a serious breach of the General Tax Act to mediate concealment, so you will have to pay a economic sanctions.

The decision reflected in twelve sentences, among other things means that the partners of Dorna, organizer of the World MotoGP, Carmelo Ezpeleta and Enrique Aldama, with their respective spouses in each case, must pay 3.9 million Euros [$4.2 million] (Ezpeleta) and 2.7 million Euros [$2.9 million] (Aldama), as income tax in 2004. Furthermore, the judgment states that both committed a serious breach for failure to enter the corresponding tax liability, so the Treasury shall establish against them corresponding sanction.

In July 2010, the Tax Inspection imposed the first a penalty of 5.1 million Euros [$5.5 million], and the second another 1.2 million Euros [$1.3 million], considering that the tax offense was very serious (not only hide but also would have measured fraudulent) means, but the High Court considered, on the contrary, it was minor offense. The Supreme Court has now partially estimated resources and state attorney states that the offense is serious (yes there was concealment but not use of fraudulent means), so that the Treasury must now recalculate the two sanctions.

The highest incidence of the Supreme Court decision is in corporate taxes Dorna Sports SL, the years 2003, 2004, 2005 and 2006, the Treasury initially turned enter a quota of 16.6 million Euros [$18.0 million], simulation of the sale mentioned and also for what he considered improper deduction of goodwill arising on mergers in the years 1999 and 2003 it added a penalty for very serious infringement of 17.2 million Euros [$18.7 million].

The National Court corrected these settlements and said that did not correspond cancel deductions related to goodwill, but appreciated the simulation of the sale (which is most of the liquidation calculated), and also lowered the infringement as very severe to mild . The Supreme ratifies the fact by the Court regarding the settlements, but raises serious infringement, so the Treasury shall recalculate the settlement and also impose sanction for serious misconduct.

The other settlements to these court decisions affecting refer to withholding tax on income of non-residents, Dorna Sports, for which he was paid 1.3 million Euros [$1.4 million] (amount that is confirmed) and will 1.2 million Euroes [$1.3 million] sanction imposed (which should be recalculated as a serious offense and not very serious), and deductions / payments on account of real estate capital of the same company, with a debt amounting to 67,000 Euros [$72,839]-for default interest, and regularizó- the situation and punishment of 3.8 million Euros [$4.1 million], which will also be recalculated by stoop very severe to severe rating by the Supreme.

The appreciated by Hacienda simulation, the High Court and now the Supreme occurred in 2003 and 2004 in a sale of shares in Dorna to a company with capital subscribed by the same vendor partners, financed by a loan, and the amount is intended in part to partners, chasing actually a covert distribution of dividends.

The judgments of the Supreme have three dissenting votes of two judges who disagree with his colleagues in the appreciation of simulation in the sale, and a third who does not believe that the offense was serious as it should not be applied concealment.

More, from a press release issued by Dorna Sports:

Dorna Sports Announcement

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.