In business practice, the attribution of tax liability to directors is one of the most frequent scenarios where liability arises, which makes this topic especially relevant for any director. This matter has been analysed by the Spanish Supreme Court in its judgment of 17 July 2025 (no. 3465/2025), which defines the scope of the duty to state reasons required of the Tax Authorities when subsidiary liability is imposed in accordance with paragraphs a) and b) of Article 43.1 of the Spanish General Tax Law (Ley General Tributaria) (LGT).
The dispute originated from a ruling issued by the Regional Collection Office, which declared the sole director of a company subsidiarily liable for a tax debt. The attribution of liability was based on two distinct grounds of liability:
(i) Article 43.1.a) LGT, relating to debts linked to tax infringements committed by the company, which include obligations under the Corporation Tax for 2014, VAT for the first quarter of 2016, and certain debts associated with the failure to comply with tax notices; and
(ii) Article 43.1.b) LGT, relating to outstanding debts in situations of cessation of activity, with the Tax Authorities identifying indications of a cessation of activity around 2015 and the existence of unpaid tax liabilities.
The central issue analysed by the Supreme Court consists of determining whether, in these scenarios, it is sufficient to provide a general reasoning based on the status of director and the existence of company debts, or if, on the contrary, it is necessary to provide more detailed reasoning that individualises the specific conduct of the director and its intentional or negligent character. The Supreme Court highlights that, although both scenarios are part of the same legal precept, they respond to different legal bases, which requires an independent analysis of their respective reasoning requirements.
In relation to the debts linked to tax infringements (Article 43.1.a) LGT), the Supreme Court reiterates that liability can neither be construed as objective nor be automatically derived from the mere status of the director. On the contrary, it requires a subjective imputation of liability based on specific, intentional or negligent conduct, linked to the company’s commission of tax infringements. That is to say, the Tax Authorities must identify and sufficiently explain the conduct of the director that contributed to the generation of debts arising from tax penalties or tax breaches. Generic references to the duties inherent to the position, nor the mere finding that the company committed infringements, are therefore not enough.
Applying this doctrine to the relevant case, the Court concludes that the attribution of liability decision lacks the required reasoning, as it is limited to general statements about the director’s duty of diligence without specifying the director’s specific conduct or its impact on the facts that gave rise to the infringements. It also emphasises that the obligation to provide reasoning rests exclusively with the Tax Authorities and cannot be remedied during administrative review or judicial proceedings.
Conversely, with respect to outstanding debts in situations of cessation of activity (Article 43.1.b) LGT), the Supreme Court confirms that a subjective element of fault is also required, arising from the failure to adopt the necessary measures to ensure the payment of the company’s debts in situations of cessation of activity. Nevertheless, it clarifies that this element may be inferred from the director’s inaction where there are clear indications of a cessation of business activity.
In the case examined, the cessation of activity, the existence of outstanding debts, their status as director at the relevant time, and the absence of actions aimed at the company’s dissolution, liquidation, or filing for insolvency were established. In light of these elements, the Court considers that the administrative decision contains sufficient reasoning in relation to this second ground of attribution, as it describes the relevant facts and the omission attributable to the director. Consequently, the attribution of subsidiary liability is upheld under Article 43.1.b) LGT.
Joan Lluís Rubio
Vilá Abogados
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17th April 2026
