
How to structure deferred payments and cross-guarantees in small-market M&A transactions
In small-market M&A transactions, deferring part of the purchase price is not an exception but a common feature of the deal structure. It reflects not
In the ruling of 13 March 2024, STS 1622/2024, the Supreme Court considers that the so-called binding theory -i.e., that the condition of director absorbs any other employment relationship for all purposes- cannot be applied in the field of taxation to reclassify an expense for directors’ remuneration as a non-deductible gratuitous benefit.
In the present case, the remuneration was paid to three individuals who were both senior executives and directors of the company. In addition, the articles of association of the company did not provide for the remunerated nature of the role of director.
In this sense, the remuneration paid to the directors cannot be classified as a donation or liberality under article 14.1.e) of the TRLIS -currently article 15.e) of Law 27/2014 of the Corporate Income Tax (IS)-, but rather they are remunerations, onerous, which, as soon as they have been accredited and accounted for, must be considered deductible expenses. Likewise, the absence of a statutory provision of the remuneration does not per se make the expense lose its status as deductible.
The deductibility of the expense for the remuneration received will depend, beyond the lack of mention in the articles of association, on the fulfillment of the following conditions: (i) accounting registration, (ii) allocation on an accrual basis, and (iii) documentary justification, as emphasized, among others, in the STS 214/2024 of 18 January 18 2024.

In small-market M&A transactions, deferring part of the purchase price is not an exception but a common feature of the deal structure. It reflects not

Equity compensation plans raise particularly complex tax questions when the beneficiary relocates to Spain. In these cases, it is not enough to look at the

Investors setting up a company in Portugal usually end up choosing between two corporate forms: the private limited company (sociedade por quotas, Lda.) and the
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