In the binding consultation V1040-16, of March 15, the DGT provides a response regarding the deductibility of the salaries received by directors of a company not for their position as such but for their personal work.
Specifically, the issue that arises is the following: the deductibility of salaries paid by a limited company with industrial activity, whose capital is subscribed by four partners at 25 percent each, the four of them are joint administrators who are obligatorily in the regime for self-employed workers without an employment contract with the entity. The position of administrator is unpaid, as established by the company's statutes, and each partner receives a monthly salary for the work they do in the company, which they declare in the Personal Income Tax as income from work.
In its response, the General Directorate of Taxes estimates that the expenses related to the remuneration of the partners for the work carried out are fiscally deductible expenses for the purposes of Corporate Tax, provided that they meet the conditions legally established in the terms of accounting registration, imputation in accordance with accrual and justification, since said expenses constitute the consideration for the functions performed, other than those of the administrator.
Different case: when the remuneration to administrators is for the direction or management
This treatment of the salaries of the administrators for the work carried out contrasts with that given to the assumption that remuneration is paid to the administrators, whose position is free according to the statutory provisions, for the provision of management or management services, said amounts have the consideration of non-deductible expenses, which continues the line marked by the Supreme Court Ruling of September 26, 2013 where the position of administrator is established will be free, the remuneration to the administrator being a liberality and, therefore, not deductible for the company. society".
Of course, although these remunerations were not deductible in Corporate Tax, this does not mean that the directors, in their personal income tax, do not have to pay taxes. Therefore, paying the administrator a remuneration when his position is free represents a double detriment: for the Company it is a non-deductible expense and for the administrator it is one more income to include in his declaration.
In accordance with the above, it is recommended that, in order to obtain maximum legal certainty and avoid tax penalties, commercial companies review the situation in the company and its bylaws, strict compliance with the legal requirements demanded for each type of remuneration and, finally, the continuous preparation of corporate documentation that can demonstrate the functions performed by the administrator and the remuneration that perceive.
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