In its ruling of 13 March 2024, the Supreme Court once again addresses the deductibility of directors’ and administrators’ remuneration for corporate income tax purposes.
In previous rulings it had already established as a doctrine that non-compliance with commercial regulations regarding directors’ remuneration cannot necessarily lead to the loss of the material right to deduct an expense accounted for, accredited and remunerated for onerous services, effectively rendered, and that neither can the correction of the expense be justified as a non-deductible liberality.
On this occasion, unlike the factual cases examined in previous rulings, the articles of association did not establish the remunerated nature of the position.
Thus, the High Court concluded as follows:
- The theory of the link cannot be applied in the tax sphere.
- Remuneration paid to directors for services which are their own and which must be understood as real and effective cannot be classified as a gift or liberality, which, as soon as they have been accredited and accounted for, must be considered as deductible expenses.
- The status of the expense as deductible is not lost by the fact that there is no provision in the articles of association. The mere fact that there is no provision in the articles of association is not to be regarded as an act contrary to the law. It is reiterated that this provision refers to very specific cases such as bribes and the like.
As can be seen, the key to the tax deductibility of the expense for directors’ remuneration will depend on whether the company can prove that the expense is real, that it is accounted for and that it corresponds to an effective provision of services by the directors that is correlated with the obtaining of business income.
Marina Guerrero Castronuño.
