The collateral liability of directors for tax debts and penalties means that, in the case that the company itself is unable to pay, the Tax Agency may demand the payment from the company directors that may have acted negligently or failed to fulfil the legal obligations inherent to their role.
However, the recent judgement handed down by the Third Chamber, Second Section, of the Supreme Court, on the 20th of May 2025, involves a relevant shift in the legal interpretation of article 43.1.a) of the General Tax Law (Ley General Tributaria, hereinafter, the ‘GTL’), as it expressly declares with immediate effect that the collateral liability attributable to company directors is of a penalising nature. Therefore, the full application of the guarantees found in Sanction Law and, as a result, of the fundamental right to the presumption of innocence enshrined in article 24 of the Spanish Constitution is required.
I. Regulatory context: Article 43.1.a) of the GTL
Article 43.1.a) of the GTL establishes that “de jure or de facto directors of legal entities, wherein tax infringements have been committed, who may not have carried out the necessary acts within their competence to fulfil their tax obligations and duties, or ,may have consented to the non-compliance by their dependants or adopted agreements that made the infringements possible” shall be collaterally liable for the tax debt and that “Their liability shall also apply to penalties”.
II. The Supreme Court’s Judgement
The judgement handed down on the 20th of May 2025 represents a relevant turning point in case law doctrine as it considers that the collateral liability set out in article 43.1.a) of the GTL is punitive. By virtue of this classification, it is not sufficient that the Tax Agency proves that the person concerned is a director, that the company has committed tax offences and that it is insolvent. It is also essential that the existence of negligent conduct on part of the director be established, duly motivated and proven, with respect to the principle of the presumption of innocence set forth in article 24 of the Spanish Constitution (hereinafter, the ‘SC’).
This focus is not entirely new, although it does acquire a certain legal transcendence in being applicable not only to the old wording of Article 38.1 of the GTL of 1963 (to which case law had previously referred), but also to the current wording of Article 43.1.a) of the GTL, which has not undergone significant change.
The first consequence derived from the new developments is that it is no longer possible to base the requirement for strict liability solely on the mere role of director. The Chamber emphasises that the attribution of liability for the company’s debt without demonstrating any act or omission nor any sort of guilt would be a breach of the principle of presumption of innocence and is incompatible with the constitutional framework.
With this in mind, the Chamber requires three elements to be demonstrated in order to justify the liability; firstly, that the subject held the position of either de jure or de facto director during the period in which the tax obligations were accrued (this is a formal objective requirement), secondly, that the company has committed tax offences and is in a situation of insolvency or inability to pay (a material objective requirement), and finally, that the director acted in a culpable or negligent way, which would determine whether the company had committed a tax offence.
The court insists that it is up to the Tax Agency to specify and give detailed reasons for the specific facts on which the judgement of guilt is based, as the mere accreditation of the sanction on the company and its insolvency is not enough to place the liability on the director. As such, to assign collateral liability and sanction the director of the company in question, the negligence in the actions of the director must be determined.
Another key topic addressed by the judgement is the question of burden of proof. The Chamber declares that the Tax Agency bears the burden of proving the existence of a negligent act or omission on the part of the director.
III. The National High Court’s (Audiencia Nacional) contested judgement
With this ruling, the Supreme Court annuls the Audiencia Nacional’s judgement that attributed collateral liability to the director of the company that incurred debts in respect of both tax returns and VAT penalties for the 2006 to 2008 tax years. According to the judgement, it was enough to prove the existence of the debt and the insolvency of the company. From that point onwards it was the director themselves that had to prove that they had acted in accordance with the diligence required by the Spanish Companies’ Act.
Kengo Matsuoka
Vilá Abogados
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30th of May 2025
