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How Lack of Statutory Provision Affects Tax Deductions

Marco Fernández Jun 3, 2024

The Supreme Court admits the tax deductibility of directors' remuneration even when there is no provision in the articles of association.

In its recent judgment of the Administrative Litigation Chamber on March 13, 2024 (Rec. 9078/2022), the Supreme Court expands its criteria on the deductibility of remuneration received by administrators.

On this occasion, unlike the cases analyzed in previous Supreme Court rulings, the remuneration paid to employees who had the dual role of high executive and administrator was not provided for in the company's bylaws.

The court concludes that the mere absence of a statutory provision should not be considered an act that goes against legality.

Therefore, the key to the tax deductibility of the expense will depend on whether the company can demonstrate that the expense is real, properly accounted for, and corresponds to actual services rendered by the administrators that are related to income generation.

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