In recent months, the Supreme Court ruling of May 20, 2025, has generated a lot of interest, and with good reason.
The ruling sets clear and necessary limits on an all too common administrative practice: the Spanish Tax Office assigning tax liabilities to directors simply because they are directors and hold that position.
This ruling does not so much create new doctrine as it closes the circle on a line of court rulings that had been developing for years but needed to be clarified. In particular, it addresses the nature and scope of the subsidiary tax liability of directors, regulated in Article 43.1.a) of the General Tax Law (LGT).
Two types of liability… and deliberate confusion
The LGT provides for two types of liability for directors for tax infractions committed by the company:
- Joint and several liability (Art. 42.1.a LGT): for those who are the cause of or actively collaborate in the infraction.
- Subsidiary liability (Art. 43.1.a LGT): for de facto or de jure directors who do not act diligently, consent to non-compliance, or adopt agreements that enable the offense.
In both cases, the law is clear: liability also extends to penalties imposed on the company.
The problem has arisen when, based on Article 43.1.a), the Spanish Tax Office has attempted to construct strict liability, based almost exclusively on the formal status of director. And that is where the Supreme Court says: no further.
The case: director, insolvent company, and automatic derivation to the director
The ruling analyzes a classic situation:
A director who held the position when the events that led to a tax adjustment and the imposition of a penalty on the company occurred. Given the impossibility of collecting from the company due to its lack of sufficient financial resources, the Spanish Tax Office initiated the corresponding derivation procedure and declared the director subsidiarily liable.
The affected party appealed, arguing something fundamental: that this form of liability is punitive in nature and, therefore, must be subject to the principles of punitive law.
Neither the Spanish Tax Office, nor the TEAC, nor the National Court agreed with him. Until the matter reached the Supreme Court.
The Supreme Court makes it clear: this is punitive law
The Supreme Court recalls that in its ruling of June 5, 2023, it had already stated that the liability under Article 43.1.a) is not purely objective: it requires not only an objective element, but also a subjective element of fault.
This new ruling of May 20, 2025, ratifies and reinforces this doctrine, developing it in two key points.
1. Prohibition of strict liability. The Supreme Court expressly rules out that the mere status of director during the period in which the infringement was committed is sufficient to establish liability. It is essential to prove culpable conduct.
2. The burden of proof lies to the Spanish tax Office.
Conclusion
The Supreme Court ruling of May 20, 2025, clearly puts a stop to the attribution of liability based solely on the status of director. The Supreme Court reiterates that this figure is not a last resort collection mechanism, but rather a punitive institution that requires proof, justification, and respect for constitutional guarantees.
The message is unequivocal: being a director does not equate to being guilty, and the Spanish Tax Office cannot make up for the lack of evidence with assumptions or generic reproaches. It now remains to be seen whether this doctrine will translate into a real change in administrative practice or whether, once again, it will be the courts that must continue to correct repeated excesses.
