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Corporate Management´s Responsibility to Social Security

  1. Concurso de acreedores
  2. Corporate Management´s Responsibility to Social Security

Lately, certain matters have come into the office relating to the fact that the Inland Revenue (or equiv. for Social Security payments/TGSS) assumes responsibility for debts against commercial firm managements originating from the non-payment of employers contributions of waged employees for which firms have an obligation.

This is a fact to which we need to pay special attention. And this is, particularly, a common area where firms, who have economic difficulties, stop paying employees contributions to the aforementioned public body as a way of trying to weather the crisis and not drain any necessary liquidity from other business needs, like payment of salaries, materials or suppliers essentials.

When this situation happens it is vital to make an agreement with the Inland Revenue (TGSS) to defer payment and avoid having three or more unpaid contributions.

On the other hand, once there are more than three unpaid contributions then the Inland Revenue (TGSS) can interpret, by literal and arguable application of Article 8 of the Bankruptcy Law, that the company finds itself in a general situation of non-payments and therefore will interpret that the commercial law is unfulfilled for reasons of liquidation of the Company Capital Law and by applying this law, will refer personal and joint responsibility to the commercial firm’s management for the amounts owing.

This consequence of responsibility will not be able to be suspended once the creditors meeting has been admitted through procedure through application of the current law and while the jurisprudence of the Court for Contentious Administrative Proceedings who know about claims which are part of the Inland Revenue (TGSS) won’t state the opposite.

And this is the important point, as it can seriously affect the usefulness of the creditors meeting for the company management if what they are trying to do is avoid their responsibility for company debts, at least, in relation to this public body. Therefore, take care with preparing a creditors meeting hastily, as you may get a surprise!

See you later!

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