Introduction
The distinction between the spheres of liability of a shareholder and that of a director is not always clear, particularly when both roles are held by the same individual. The boundary of liability often becomes blurred, raising doubts as to whether certain acts should be attributed to the company as an expression of the corporate will, or to the management body, by virtue of the exercise of its administrative functions.
This issue has recently been addressed by the Spanish Supreme Court (the “TS”) in its Judgment of July 9th, 2025 (ECLI:ES:TS:2025:3406), which provides important clarification on the liability of those who simultaneously hold the positions of shareholder and director, especially in cases involving tax infringements resulting from negligent conduct by the company’s management body.
Background and origin of the dispute
A limited liability company (hereinafter, the “Company”) was sanctioned by the Spanish Tax Administrative Agency (AEAT) following an inspection that uncovered fraudulent practices in the Company’s dealings with third parties, as well as serious accounting irregularities.
As a result of the inspection, the AEAT issued a tax assessment for a total of €284,499.42, of which approximately €98,000 corresponded to the economic sanction imposed on the Company.
First Instance
The Company filed a corporate liability claim against the two directors who managed the company at the time of the infringements (hereinafter, the “Co-defendants”), demanding compensation for the total amount of the damage suffered.
The Court of First Instance upheld the claim and jointly and severally ordered the Co-defendants to pay the full amount of €284,499.42 claimed by the AEAT from the Company.
Appeal
One of the directors appealed before the Provincial Court, which reversed the first-instance decision. The Provincial Court relied on a Supreme Court Judgment of January 12th, 2018, concluding that, since the Co-defendants were both shareholders and directors, their conduct should be attributed to the Company itself rather than to them personally in their capacity as directors. (See the judgment via the hyperlink.)
Cassation
The Company filed an appeal in cassation, arguing that the Co-defendants’ actions were personally attributable to them, insofar as the infringement occurred as a result of their negligent management in the exercise of their duties as directors.
The Civil Chamber of the Supreme Court upheld the appeal and overturned the Provincial Court’s decision, while also clarifying the scope of its previous Judgment of January 12th, 2018, which the Provincial Court had relied on.
Criteria for the attribution of liability based on the nature of the shareholder-director’s conduct
The Supreme Court specified that said doctrine, according to which, when a company’s directors are also its shareholders, some of their actions may be attributed to the company itself, is not automatically applicable. Instead, it is necessary to assess the specific circumstances of the case and the nature of the conduct that caused the harm.
Specifically, such attribution to the company will apply only when the harmful act arises from decisions of the general meeting of shareholders or shareholders. Conversely, when the damage derives from the ordinary management entrusted to the board of directors, such as contracting or accounting duties, the directors will be personally liable, even if they also hold shares in the company.
In the case at hand, the tax infringement penalised by the AEAT stemmed from the negligent and fraudulent management in contracting and accounting, acts intrinsic to the role of a director. Consequently, liability could not be shifted to the Company merely because the individuals responsible were both its shareholders and directors.
Determination of the Damages
It is also noteworthy that, although the Supreme Court declared in its Judgment that, although the directors were liable, such liability did not extend to the entire amount of €284,499.42 claimed by the AEAT from the Company.
For the purposes of the corporate liability claim regulated under Article 236 of the Spanish Companies Act (“Ley de Sociedades de Capital” or “LSC”), the Court made a clear distinction between two components:
(i) Principal tax debt
This refers to the amount of tax owed by the Company, directly arising from its business activity and its legal duty to contribute.
The non-payment of this debt does not, in itself, constitute compensable damage attributable to the directors, since it does not stem from unlawful conduct by the management body, but rather from the company’s own tax obligation.
(ii) Tax sanction
The economic sanction imposed by the AEAT, however, does derive from intentional or grossly negligent behaviour attributable to the management body and thus constitutes direct damage to the Company, which must be compensated by the directors.
Accordingly, the directors’ liability was limited to the amount of the tax sanction, approximately €98,000, instead of the total €284,499.42 assessed by the AEAT.
In conclusion, this judgment reinforces the principle that the status of shareholder does not shield a director from liability when the damage arises from acts inherent to the functions of the management body, and provides a clear criterion for determining the recoverable amount in corporate liability claims involving tax infringements.
Julio González
Vilá Abogados
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7th of November 2025
