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V1026-14 10 April 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · administrador único

Sole director's remuneration is deductible for Corporate Tax if it does not exceed the amount set by the General Meeting

A company has requested clarification on whether the remuneration paid to its sole director for management and senior executive functions is deductible for Corporate Tax purposes. The Directorate-General for Taxes (DGT) has ruled that such payments are deductible, provided they meet the requirements for accounting registration, accrual, and substantiation, and that the total remuneration does not exceed the amount established by the General Meeting.

The question raised

1) Whether the remunerations paid to the natural person J for their functions of administration and senior management and management of the requesting company would constitute a tax-deductible expense in the Corporate Income Tax of the latter, in view of the wording of the corporate bylaws.

The DGT's ruling

The relationship of the director with the company is of a commercial nature, therefore the senior management role is absorbed by that of the director. The expense is deductible for Corporate Income Tax purposes if the sum of the remunerations for both functions does not exceed the amount set annually by the General Meeting. For Personal Income Tax purposes, these amounts are taxed as income from employment, regardless of their commercial nature.

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