Tax Advisory Spain: Tax liability in bankruptcy

Tax advice allows the avoidance of solidarity or subsidiary responsibilities

After the great economic and social impact of COVID-19 in Spain, experts believe that it will lead to an increase in bankruptcy proceedings. Given this, B Law & Tax analyzes the main keys to be taken into account by the administrators of the companies that request a bankruptcy.

First, the administrator should avoid incurring joint or subsidiary tax responsibilities. Therefore, you must know first hand who is the tax liability of that bankruptcy:

  • According to article 41 of the LGT, the tax liability will be for the main debtors, but they can also designate joint and several responsibles or subsidiaries of the tax debt.
  • The derivation of the administrative action to demand the payment of the tax debt to those responsible will require an administrative act in which, after hearing the interested party, the responsibility is declared and its scope and extent are determined, in accordance with the provisions of articles 174 to 176 of the LGT.
  • To refer the administrative action to the subsidiary responsible parties, the previous declaration of default of the main debtor and the joint and several responsible parties will be required.

On the other hand, it is worth noting the figure of who can be considered jointly liable for the tax debt in a bankruptcy. In this case, there are several alternatives:

  • According to art. 42 of the LGT, the persons or entities that cause or actively collaborate in the realization of a tax offense.
  • Companies that participate in organized schemes to commit tax offenses, as well as those that continue for any reason in the ownership or exercise of farms or economic activities, for the tax obligations contracted from the previous owner and derived from their exercise.
  • The persons or entities that are causing or collaborate in the concealment or transmission of assets or rights of the person liable to pay in order to prevent the Tax Administration from acting, as well as those who, with knowledge of the embargo, the precautionary measure or the constitution of the guarantee, collaborate or consent to the removal of the seized goods or rights, or of those goods or rights on which the precautionary measure or guarantee had been established.

Finally, it is worth noting the figure of the subsidiary responsible in a bankruptcy that also includes several options:

  • Legal persons who have not carried out the necessary acts that are their responsibility for the fulfillment of tax obligations and duties, have consented to the non-compliance by those who depend on them or have adopted agreements that make the infractions possible, extending their responsibility to sanctions..
  • Legal entities that have not done what is necessary to pay the tax obligations accrued by them, have adopted agreements or taken measures that caused the non-payment.
  • Those that have effective control, total or partial, direct or indirect, of the legal persons or in which a common governing will concur with them, when it is proven that the legal persons have been created or used in an abusive or fraudulent way to evade the universal patrimonial responsibility before the Public Treasury and there is uniqueness of people or economic spheres, confusion or patrimonial deviation.
  • Those in which the taxpayers have effective control, total or partial, or in which there is a common governing will with said taxpayers, for their tax obligations, when it is proven that such persons or entities have been created or used in an abusive or fraudulent way as a means of circumvention of the universal patrimonial responsibility vis-à-vis the Public Treasury.

B Law & Tax
International Tax & Legal Advisors.

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Etiquetas: COVID-19, tax advice Spain, tax advisor Madrid, Royal Decree-law, Administration of Justice, Bankruptcy