The Real Madrid accepted that the Providence fund of the Cayman Islands would pay them 200 million euros, which could be investigated by the Treasury for a possible case of tax fraud, as published by infoLibre, who compiled this information from new Football Leaks data shared by Der Spiegel with the European Investigative Collaborations (EIC).
The money was prodent from two Providence affiliates (Providence Equity Partners VII-A LP and Providence VII Global Holdings LP), two companies that are directed to the tax haven from the Cayman Islands, specifically in the George Town building.
“Two companies based in the Cayman Islands and domiciled in a building in George Town where there are thousands of companies domiciled! guarantee the payment to the club of 200 million euros by a Luxembourg company of 20 thousand euros of share capital! It seems like a joke but I’m afraid it’s serious ”.
The merengue painting signed a « letter of intent », by which the fund promised to pay them 500 million euros in 10 years, which would be divided into three parts: « Two of 200 million each and one of 100 million more, in exchange for receiving a percentage – 23.75 percent – of the increase experienced by Real Madrid’s income from the exploitation of certain commercial rights »; This deal does not include the sponsorship of the shirt, the name of the Santiago Bernabéu or Valdebebas.
Real Madrid knows the risk of this movement
According to the published report, the merengue painting knew of the risk implied by this structure, « From the first moment. Already on December 1, 2016, just after the negotiations began, Julio Esquerdeiro drew up an internal work note where, in addition to explaining the particularities of the participation account contract, he warned that ‘The investment structure that the investor uses (Providence) must avoid the reputational and image risks that could derive from it for Real Madrid, therefore, said structure must be adjusted to a common practice that does not pose tax risks to Real Madrid. ‘ For that reason, it recommended that the ‘counterpart’ of the club in the contract was ‘a resident entity for tax purposes in Spain directly or indirectly owned by the investor’. It was not so ».
Another problem that Real Madrid could face would be in the tax issue, therefore, the financial director mentioned that “given this structure, easily verifiable by the Tax Agency, the exemption from withholding payments from Real Madrid to PQ VII SARL , as a company resident in the EU, will be questioned with almost total certainty by the Tax Agency, which will requalify the payments considering the beneficial owner, in this case, a tax haven, and therefore, forcing Real Madrid to practice a 24 percent withholding on payments to Providence”.
The infoLibre medium mentioned that they tried to find the people of Real Madrid to clarify several points, without having an answer so far.