The recurring issue of Company directors’ remunerationand fees for services other than those of the position of director is newsagain.

As is known, in Company law, section 220 of the SpanishCompanies Act (LSC) stipulates that the services provided by a companydirector to the same company that are different, out of the scope of the dutiesand services inherent to the position, need prior approval by the Shareholders(to avoid agency and conflicts of interest issues).

However, in the tax field, the Supreme Court injudgment 449/2024 of 13 March endorses the tax deductibility of remunerationpaid to directors for services other than those of the director's position aslong as they are true, and are duly booked in the company accounts – notrequiring for these purposes the Shareholders prior approval.

This certainly means a relief for companies.

However, in the Company law field, under the LSC, theshareholders retain their right to control and claim for the refund of paymentsmade to Directors, and exercise actdions for Directors Liabilities for thedamages caused by such payments without the necessary consents.

In any case, even in the tax field, a change ofcriteria of the Supreme Court itself in the future should not be excluded,since the legislation regulating this issue, in the Company law field, the LSCexpressly requires for validity the prior shareholders’ approval, especiallyrelevant in companies with shareholders who are not the director(s) – althoughany risk in this regard will be completely unlikely when in single-membercompanies the director it is, in turn, the only shareholder.

‍

_____________________________________________________________________________

© amber legal & business advisors This document is a generalinformation and should not be considered legal advice. For specific information andadvice you can contact us at info@amberbas.com and www.amberbas.com

‍

‍