Spanish legislation and the Tax Agency set clear guidelines on the remuneration of company directors, including the administrator of a company, and working partners in a company. These rules are essential both to comply with tax regulations and to avoid potential penalties. Below, we explain the key aspects you need to consider:

Payroll for a company administrator

If your company’s Articles of Association specify that the role of administrator is remunerated, the remuneration system must be clearly defined. This includes specifying the remuneration items and determining whether the amount is fixed or variable. If the remuneration includes a variable component, the indices on which these variables will be calculated and the periods must be defined. Omitting any of these details may result in the position being deemed unpaid, as established in Article 217 of the Capital Companies Act (Ley de Sociedades de Capital, LSC).

Furthermore, the maximum amount of the administrator’s annual remuneration must be approved by the General Meeting of the company (Art. 217 LSC) and may be modified by the same body. It is worth noting that the administrator’s remuneration may never exceed 10% of the distributable profits among shareholders in the case of Limited Liability Companies (Art. 218.2 LSC).

Regarding withholding on the administrator’s remuneration, a fixed rate of 35% applies. However, this rate is reduced to 19% if the company’s turnover is less than €100,000, pursuant to Article 80 of the Income Tax Regulations (Reglamento del IRPF).

Payroll for working partners

Remuneration of working partners is deductible provided it corresponds to personal services rendered for the company’s activity. It is essential that such remuneration is valued at market rates, i.e. in accordance with the applicable collective agreement. This is because remuneration of working partners is considered a related-party transaction, as established in the Directorate General of Taxes binding consultation CV 27-07-16.

At Blegal, we recommend aligning your payroll as a company administrator with market rates, as required by current legislation. Failure to adhere to this guideline may lead to difficulties justifying payroll in the event of an inspection, potentially resulting in penalties.

Keeping this legal framework in mind is especially important in Limited Liability Companies where the majority or sole partner also serves as the administrator and performs the work—common scenarios in which roles overlap and the temptation to sweep the company’s monthly results through remuneration can be significant.

Our team, consisting of Social Graduates with extensive experience in these matters, is here to help you regularise your situation and avoid future issues.

If you have any questions or need further assistance, please do not hesitate to contact us. We will be delighted to help you resolve any queries you may have.

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