Pay the administrator for carrying out work in the company
Posted: Wed Dec 18, 2024 5:54 am
In many commercial companies, the articles of association of the company establish that the position of administrator will be free of charge , but then the administrator himself performs work unrelated to the administration of the company and therefore receives a salary for said work .
In this case, and mainly as a result of various Supreme Court rulings, we have to quantify and clarify perfectly the scope of the remuneration to the directors , whatever type they may be. Both for their effects on the commercial relationship with the partners and on the tax deductibility of said expenses for the company. I am copying a query that has come to us to clarify all these points:
I am the Sole Administrator of a limited company where I hold 50% of the shares and there are no employees. The position is not remunerated (according to the consulting email list Statutes). However, I receive a remuneration (salary?) for the administrative work carried out (accounting, invoicing, carrying out the consultancy work that is the corporate purpose, etc.). Several questions arise for me: Do I have to have some kind of employment contract for this activity?
The first detail we have is that the company cannot pay the administrator for the employment relationship if this is not provided for in the bylaws . That is, the bylaws must be modified to contemplate that the company does not pay the administrator for the tasks inherent to the administration of the SL but does pay for the performance of dependent work in the company. This requirement is essential to avoid claims for undue payments by the other partners and so that the payments made to the administrator are deductible in corporate tax without any room for doubt.
Once it has been established that the administrator will indeed receive payments from the company for his dependent work, the General Meeting must annually set the amount of remuneration to the administrator for this work . However, on some occasions, the Tax Agency has admitted as deductible these payments to the administrator for work performed when these requirements have been met:
Accounting in the year in which they accrue and justification of the expense.
Relationship with obtaining income, which must be able to be proven by the means admitted by law.
Proof of the obligation that the payment made has for the company due to the existence of an employment relationship between it and the administrator who performs such work.
In this case, and mainly as a result of various Supreme Court rulings, we have to quantify and clarify perfectly the scope of the remuneration to the directors , whatever type they may be. Both for their effects on the commercial relationship with the partners and on the tax deductibility of said expenses for the company. I am copying a query that has come to us to clarify all these points:
I am the Sole Administrator of a limited company where I hold 50% of the shares and there are no employees. The position is not remunerated (according to the consulting email list Statutes). However, I receive a remuneration (salary?) for the administrative work carried out (accounting, invoicing, carrying out the consultancy work that is the corporate purpose, etc.). Several questions arise for me: Do I have to have some kind of employment contract for this activity?
The first detail we have is that the company cannot pay the administrator for the employment relationship if this is not provided for in the bylaws . That is, the bylaws must be modified to contemplate that the company does not pay the administrator for the tasks inherent to the administration of the SL but does pay for the performance of dependent work in the company. This requirement is essential to avoid claims for undue payments by the other partners and so that the payments made to the administrator are deductible in corporate tax without any room for doubt.
Once it has been established that the administrator will indeed receive payments from the company for his dependent work, the General Meeting must annually set the amount of remuneration to the administrator for this work . However, on some occasions, the Tax Agency has admitted as deductible these payments to the administrator for work performed when these requirements have been met:
Accounting in the year in which they accrue and justification of the expense.
Relationship with obtaining income, which must be able to be proven by the means admitted by law.
Proof of the obligation that the payment made has for the company due to the existence of an employment relationship between it and the administrator who performs such work.