Are not the remuneration of the directors of a commercial entity, credited and accounted for, deductible because they are not provided for in the articles of association? What if, although provided for in the articles of association, they have not been approved by the General Meeting, in the case of a sole shareholder?
The Supreme Court has recently admitted to cassation two rulings on the deductibility of directors' remuneration.
Remuneration not provided for in the bylaws
In the Supreme Court Order of July 6, 2022 (Rec. 7435/2021), it is established that it is in the interest of the court to determine whether the remuneration received by the directors of a commercial entity, accredited and accounted for, constitutes a non-deductible expense because it was not provided for in the bylaws, according to their literal wording, or whether, on the contrary, the failure to comply with this requirement cannot lead, in any case, to the consideration of the expense as a gratuitous expense and the inappropriateness of its deductibility.
The Court argues that there is no Supreme Court jurisprudence in cases in which the deduction of remuneration paid by the corporate taxpayer to directors for which there may be a correlation with income, but whose provision does not appear unequivocally in the bylaws, because although it is stated therein that the position is remunerated, there is controversy as to the limit of the remuneration.
Remuneration provided for in the bylaws and not approved by the General Shareholders' Meeting
On the other hand, in the Order of the Supreme Court of June 29, 2022 (Rec. 6442/2021), the Court states that it is in the Court's interest to determine whether the remuneration received by the directors of a commercial entity, accredited, accounted for and provided for in the company's bylaws, constitutes a non-deductible liberality due to the fact that the relationship linking the recipients of the remuneration with the company is of a commercial nature and that the remuneration has not been approved by the General Shareholders' Meeting, or if, on the contrary, since the company is a sole shareholder company, compliance with this requirement is not required or, even if it is required, its noncompliance cannot lead to the consideration of the expense as a gratuitous expense and the inappropriateness of its deductibility.
There is no jurisprudence either, in cases in which the deduction of remuneration paid by the taxpayer for corporate income tax to managing directors that are provided for in the company's bylaws and that are correlated with the company's income, but that have not been approved by the General Shareholders' Meeting, as presented in the lower court's ruling.
