Millions of public euros to a network of companies: the Mallorca Live model

PalmaThe group of companies on which the Mallorca Live brand is based, which includes, in addition to the festival, the Mallorca Live Nights and Es Jardí series, has received more than three and a half million euros from public entities in the last five years. Of these, more than two-thirds since 2023. Among the different contributions, which include sponsorships and grants, one of the most notable is that of AETIB, the Tourism Strategy Agency of the Balearic Islands, which since 2023 allocates around half a million public euros to the Mallorca Live festival within the framework of a call for sponsorships for major cultural and sporting events.

The Mallorca Live network includes about twenty companies, many created in the last five years: on the one hand, limited companies, and on the other, economic interest groupings, known as AIE. Among the former is Mallorca Live Music SL, currently the owner of the “business consisting of the operation of the music festival called Mallorca Live Festival and the concert series Mallorca Live Nights”. It is so after having bought it, at the end of 2024, from another company in the group, Mallorca Music Brand, for 4.6 million euros – although 3.3 were declared “pending collection”. A year earlier, in 2023, the company Mallorca Music Brand had closed the fiscal year with losses, according to the Mercantile Registry.

Incentives to invest in culture

Regarding economic interest groups, this is a legal figure that allows companies to become investors in a project, such as cultural events, in exchange for significant tax advantages. These companies do not appear as sponsors nor do they assume any role within the event: they have a financial and fiscal function. They contribute money and, in return, can pay less taxes. Furthermore, deductions are only one of the advantages they can obtain, as they are taxed under a fiscal transparency regime. In the event that the group has losses, the partners can assume them and thus reduce their tax burden. However, today the economic interest group is not the most widely used formula for investment in culture, according to Miguel García, from the law firm Sympathy for the lawyer, specialized in the music industry. “Economic interest groups had, in their time, a great reception in research, audiovisual, and performance projects. But, sometimes, the projects they hosted tended to impute losses, which made traceability by the Tax Agency difficult and led to greater control by the AEAT and less legal-financial guarantee. Therefore, today the financing contract model is used much more than that of the AIE, which is much more complex and generates more legal uncertainty”. 

The economic interest groupings that appear as dependent on companies of the Mallorca Live brand are numerous: at least fifteen. Some have declared very significant losses in recent years. For example, the grouping Mallorca Live Festival 2023 AIE, which closed 2023 with more than 1,700,000 euros in losses. In 2024, the company Mallorca Music Brand bought 99% of it from two of the three partners who were part of it, the companies Ingeniería Solar Avanzada and Migasa Aceites –the third was another company in the group, Mallorca Live Music, which held 1%. In any case, it should be remembered that with tax incentives for investments in culture, through economic interest groupings or financing contracts, one of the objectives is to reduce the cultural sector's dependence on public funding. In the case of Mallorca Live, however, this has not been exactly the case. It has been, in fact, quite the opposite.