Over the past few years, the Tax Agency has been relentless in searching and searching for possible subjects to whom to transfer the unpaid tax debts of companies that, for one reason or another, were forced to close their doors. As if closing a company weren't a traumatic enough event, add to that the pressure of maybe you have to face the payment of tax debts that the company was unable to meet before ceasing its activity.
The broken umbrella of limited liability.
As is common knowledge, companies exist, among other things, to create a protective umbrella that allows one to participate in economic life while keeping one's personal assets safe. This is a basic and essential principle, and yet the legislator has decided that tax debts can be transferred to other entities on certain occasions. And I say on certain occasions because Directors are not always liable for unpaid tax debts of companies that have ceased their economic activity., no matter how much the Tax Agency insists on collecting every last cent by resorting to liability derivations. This is not an objective, automatic, and inevitable liability.
Theory versus harsh reality.
The scenarios in which the Treasury can pursue the administrator's personal assets are as slim as the chances of a politician fulfilling his campaign promises. But what the law says is one thing, and what the Tax Administration does is quite another.
In principle, to demand such liability from the administrator, it is necessary that he or she himself has not acted diligently in the dissolution and liquidation of the company. However, in recent years, the Tax Agency has attempted to misuse the subsidiary liability assumption of Article 43.1.b) of the General Tax Law.[1], demanding unpaid tax debts from company directors, without bothering to prove the director's negligent and/or culpable conduct. That is, without demonstrating whether he truly deserved such a serious rebuke.
The requirements that the Treasury prefers to ignore.
This liability does not automatically arise from the existence of unpaid tax debts., but rather it requires the concurrence of very specific requirements. Specifically, it requires the following requirements to be met:
(i) The cessation of the activity of the legal entity;
(ii) The existence of outstanding obligations of the principal debtor at the time of termination;
(iii) The status of director of the alleged responsible party at the time of termination;
(iv) The unlawful conduct of the administrator.
When the legislator created the figure of the subsidiary responsible of article 43.1.b) LGT did not do so to automatically derive all unpaid debts of companies whose directors have ceased their activities. He did it to punish a specific behavior: the negligence and/or negligence of the director in failing to fulfill the obligations inherent to his position, especially those tending toward the orderly dissolution of the company or, where appropriate, its declaration of bankruptcy. This is because it does not automatically transfer liability to the directors.
The Supreme Court puts things in their place.
Fortunately, our Supreme Court has decided to take action on the matter and has ruled with the force of a well-aimed axe blow. In its Judgment No. 1037/2025 of July 17, 2025, it established that in order to apply the subsidiary liability of Article 43.1.b) of the LGT (General Tax Law), The negligence and/or fault incurred by the administrator must be specifically motivated in the referral agreement. for failure to comply with the obligations inherent to their position, and in particular those tending towards the orderly dissolution of the company or, where appropriate, its declaration of bankruptcy.
This sentence, In the words of the Court itself, “dismisses any trace of objectivity in this responsibility”, putting an end to à la carte referrals once and for all. The consequence is crystal clear: without motivation there is no derivation.
A step towards legal security.
The position adopted by the Supreme Court was more than necessary. The requirement to specifically justify the negligence and/or fault of the directors is a significant progress in taxpayer protection, by ensuring that accountability is enforced only when truly appropriate.
In short, this ruling returns the derivation of subsidiary liability of article 43.1.b) LGT to its true nature: a mechanism to reproach certain behaviors, not an automatic collection tool. Diligent administrators can breathe easy: acting in accordance with the law and fulfilling the obligations of their position will finally provide a real guarantee against automatic transfers.
[1]Law 58/2003, of December 17, General Tax
Maria Estevan Coscollá
Collaborator in the Tax Litigation Area
