The transfer of tax liability has become one of the biggest risks for company directors in Spain.
It is common for citizens of German, Swiss, British or American nationality to take over the management of limited liability or public limited companies established in Spain, whether within the framework of real estate investments, business projects or asset holding structures.
In many of these cases, the non-resident administrator is unaware that his mere registration in the Commercial Registry as an administrator of a Spanish company may make him the recipient of a procedure for the transfer of tax liability for tax debts of the legal entity.
The Spanish State Tax Administration Agency (AEAT) has significantly increased the number of tax liability proceedings initiated in recent years under Articles 42 and 43 of Law 58/2003, of December 17, the General Tax Law (LGT). The volume of these cases, coupled with the potential amounts of the debts involved, makes this one of the areas with the highest levels of tax litigation in Spain.
However, the legal landscape has undergone an extraordinarily significant evolution in 2025. Several Supreme Court rulings have established substantial limits on the exercise of the administrative power to transfer tax liability, strengthening the guarantees for administrators and circumscribing the scope of action of the Tax Administration.
Regulatory framework for the transfer of tax liability
The General Tax Law distinguishes two categories:
- Joint and several liability (Article 42 LGT)
- Subsidiary liability (Article 43 LGT)
Both allow debts to be demanded from third parties other than the main obligor, but with different requirements.
Subsidiary liability of the administrator (Article 43.1.a LGT)
The most frequent scenario for the transfer of tax liability for directors is that provided for in article 43.1.a) LGT, when:
- The company has committed tax offenses.
- The necessary actions to fulfill tax obligations were not carried out.
- The breach was tolerated.
- Agreements were adopted that enabled the violations.
Likewise, article 43.1.b) LGT contemplates the transfer when the company ceases its activity without settling its tax debts.
Principle of subsidiarity
The transfer of subsidiary tax liability can only be activated when:
- The principal debtor has been declared bankrupt.
- The jointly liable parties have been exhausted.
This principle was decisively reinforced by the Supreme Court in 2025.
STS 594/2025: sanctioning nature of the transfer of tax liability
Supreme Court ruling 594/2025 marks a turning point.
The case analyzed the transfer of tax liability to an administrator for VAT debts exceeding 355,000 euros.
The Supreme Court established key principles:
1. Sanctioning nature
The transfer of tax liability under Article 43.1.a) LGT is of a punitive nature.
2. Prohibition of strict liability
The mere status of administrator is not sufficient to justify the referral.
3. Prohibition of reversal of the burden of proof
It is not the administrator's responsibility to prove their innocence.
It is the Administration's responsibility to prove the specific culpable conduct.
4. Requirement of individualized motivation
Generic formulas are not valid. The specific conduct of the administrator must be proven.
5. Application of the principle in dubio pro reo
Any doubts should be resolved in favor of the administrator.
Case law confirmation: STS 901/2025 and STS 3465/2025
STS 901/2025 confirmed that registration in the Commercial Registry is not sufficient to justify a transfer of tax liability.
STS 3465/2025 extended these guarantees also to the case of cessation of activity of article 43.1.b) LGT.
Supreme Court ruling of November 5, 2025: obligation to exhaust joint and several liability
The Supreme Court established that the transfer of subsidiary tax liability can only be activated when:
- The principal debtor has been declared insolvent.
- The existence of jointly liable parties has been investigated.
If the administrator provides clear evidence of jointly liable parties, the AEAT must investigate them and justify its decision.
Practical implications for non-resident administrators
Foreign administrators are in a particularly vulnerable situation due to:
- Lack of knowledge of the Spanish tax system.
- Physical distance.
- Notification problems.
- Dependence on local advisors.
Essential principles:
- The formal status of administrator is not enough.
- Generic motivation is contestable.
- Other avenues must be exhausted before referral.
- Appeal periods are short.
Preventive strategies against the transfer of tax liability
Document prevention
It is recommended to keep:
- Minutes of board and council meetings.
- Instructions to tax advisors.
- Formal requirements.
- Evidence of fiscal supervision.
Defense against notification
The following must be analyzed:
- If there is evidence of culpable conduct.
- If the principal debtor was declared bankrupt.
- Whether jointly liable parties were investigated.
- If the motivation is sufficient.
- If the action has expired.
Conclusion
The Supreme Court's jurisprudence in 2025 has transformed the system of tax liability transfer.
Today, automatic referral based solely on the formal status of administrator is no longer possible. The Administration must prove the specific conduct and respect all the guarantees of the disciplinary procedure.
For non-resident administrators, this new scenario provides a solid basis for challenging tax liability transfer agreements that do not meet these requirements.
Have you received a notification of tax liability transfer?
Our team of expert tax lawyers in Mallorca, with extensive experience in defending non-resident administrators against AEAT referral procedures, can analyze your case and design the most appropriate defense strategy.
Contact Resitax for an initial consultation.