{"id":12337,"date":"2024-11-13T14:51:40","date_gmt":"2024-11-13T14:51:40","guid":{"rendered":"https:\/\/seegman.com\/the-representation-in-the-management-body-of-related-companies-cannot-be-considered-included-in-the-functions-of-the-managing-director\/"},"modified":"2025-02-11T22:47:23","modified_gmt":"2025-02-11T22:47:23","slug":"the-representation-in-the-management-body-of-related-companies-cannot-be-considered-included-in-the-functions-of-the-managing-director","status":"publish","type":"post","link":"https:\/\/seegman.com\/en\/the-representation-in-the-management-body-of-related-companies-cannot-be-considered-included-in-the-functions-of-the-managing-director\/","title":{"rendered":"The representation in the management body of related companies cannot be considered included in the functions of the managing director"},"content":{"rendered":"\t\t
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The representation in the management body of related companies cannot be considered included in the functions of the managing director<\/h1>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
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The TEAC clarifies that the representation of the managed company in other group companies does not form part of the inherent functions of the position of managing director and must therefore be paid separately from the salary received as a director.<\/em><\/p>\n

The ruling of the Central Economic-Administrative Court (TEAC), issued on 24 September, establishes a criterion regarding the representation function of managing directors in related companies and its tax implications. The TEAC holds that, even if a parent company controls the capital of other related companies, the representation of the company in these companies does not constitute an activity of the managing director.<\/p>\n

The TEAC, in its analysis, also rejected the taxpayer’s argument that the contract signed with the company, or even the articles of association, could justify the inclusion of the representation functions within the overall salary as managing director. According to the court, it is not possible to contractually agree that these representation functions are included within the duties of the managing director, given that these are distinct activities that require separate and specific remuneration.<\/p>\n

The TEAC ruling determines that in cases where the representation functions are not remunerated independently, it is necessary to regularise the taxable bases of both the director’s personal income tax and the company’s corporate income tax. Specifically, the value of the representation functions is recalculated at market price, and the difference between the salary received and the real value of the functions is included both in the director’s personal income tax return and in the company’s deductible expenses.<\/p>\n

The TEAC makes it clear that the function of representation in related companies is not intrinsic to the position of managing director and must be remunerated separately, complying with the principles of transparency and valuation at market price. In conclusion, the TEAC’s ruling underlines the importance of maintaining an adequate separation between the functions of management and those of representation in related companies, ensuring that they are remunerated and declared separately.<\/p>\n

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