New "twist" in the tax deductibility of remuneration paid to directors
18/01/2024
New "twist" in the tax deductibility of remuneration paid to directors
En los medios
Deductibility of Directors' remuneration in the Corporate Income Tax: what challenges does it present?
Our colleagues from the Tax Department, Juan Ignacio Echarren, managing partner of the Tax Department, and Nuria Estévez, lawyer, analyze this situation in Economist & Jurist, which has generated great controversy in recent years.
The 'Mahou ruling', issued in 2008, tackled this controversy by applying the 'Theory of the link', according to which when the same person holds the position of director and also provides services under a senior management contract, the senior management employment relationship is absorbed by the commercial relationship of director, preventing the tax deduction of remuneration paid to directors and board members when they do not comply with commercial regulations.
However, following the ruling of two pronouncements of the Supreme Court in 2023 (June 27 and November 2) by which it changed criteria denying the qualification as a liberality of the remuneration paid for the functions performed by a senior manager who also has the status of administrator, and allowing its tax deductibility.
On the other hand, the Supreme Court, in its judgment of June 27, appeals to the mentioned 'Theory of the link' to "make of worse condition" the workers who at the same time are administrators in comparison with other workers who do not have this double link.
See the full article in E&J, click aquí.
