Instrumental companies: sanctions

The tax authority conducts many inspections on professional or artistic companies, as it considers that many of them are "instrumental" –they are only established so that the profits are taxed under the Corporate Tax (IS) and not under the Personal Income Tax (IRPF), whose marginal rate is much higher–. In those cases, the tax authority verifies who has the human and material resources that allow the services to be provided. If the company lacks the structure for this (or does not allocate it to such services), it is when it is considered that there is simulation and that the company is instrumental.

When the tax authority concludes that a company is instrumental, it does the following:

• It calculates the IRPF contribution of the partner(s), attributing to them all the income and expenses of the company; that is, as if the company did not exist.
• At the same time, since it considers that the company is a mere simulation and therefore has not carried out any activity, it refunds the contributions paid for the IS.

In addition, in these cases, the tax authority can impose a sanction of between 50% and 150% on the contribution that was not paid.

Well, the Supreme Court has established that the calculation base for this sanction is not the unpaid IRPF contribution by the partner, but the difference between that contribution and the IS contribution paid by the interposed company regarding the same income.

 

We will advise you on the inspection procedures that your company is subject to and we will defend your interests against the tax authority.