In the Spanish business environment, the transfer of money between a company and its partners is a common practice, but also delicate. This operation must be done in compliance with the law to avoid tax or legal consequences that may affect both the company and the partners.
Contributions from partners to the company
One of the most common ways in which partners can transfer money to the company is through contributions.
These can have various purposes: strengthen the cash flow, cover losses or finance new investments.
Legally, contributions can be made through a share capital increase or through non-repayable contributions (or on account of future expansions).
The capital increase implies a modification of the byelaws and requires going through a notary and registering in the Mercantile Registry.
It involves the issuance of new participations or shares, and, therefore, alters the ownership structure of the company.
This formula is appropriate when you want the contribution to have permanent patrimonial effects.
On the other hand, non-repayable contributions do not require a public deed or registration.
They are simple deliveries of money by the partners without receiving direct consideration or altering the shareholding ratio.
Although they are more agile, they must be reflected in the accounting as equity and must have a clear documentary support that accredits their nature.
Remuneration to partners: salaries, dividends and loans
When it is the company that transfers money to its partners, the legal framework becomes more complex, especially when the partner also performs functions in the company.
In this case, there are several legally admitted formulas, each with different fiscal and accounting implications.
One of them is remuneration as a worker or administrator. If the partner provides real services for the company, he can receive a salary, provided that it is stipulated in the employment contract or in the byelaws (in the case of administrators).
This salary is subject to personal income tax withholding and Social Security contributions. In addition, it must respect the market criteria and be duly justified by the functions performed.
Another way is the distribution of dividends. When the company obtains profits, it can distribute part of them among the partners in proportion to their participation.
For this, it is necessary that the general meeting approves the distribution and that there are distributable benefits, that is, after covering legal reserves and previous losses.
Dividends are taxed in the personal income tax of the partner as income from moveable capital, and the company must practice a withholding tax of 19%.
It is also possible that the company lends money to the partner, but this operation must be formalised through a loan agreement, with a clear term, interest and conditions.
The loan must be recorded in the accounts and at market value, since otherwise it can be considered a covert remuneration or an unauthorised liberality.
In addition, loans to partners may be subject to inspection by the Treasury if their purpose and conditions are not adequately justified.
Loans from partners to companies
The loan of the partner to the company is another common modality. This operation can be carried out to cover specific liquidity needs or finance a specific project without resorting to external financing. It is completely legal as long as it is duly formalised by contract, an interest rate is established according to the market and it is registered in the company’s accounting.
From a tax point of view, the partner must pay taxes on the interest received as income from the moveable capital. The company, for its part, can deduct such interest as an expense if the market requirements are met and it is not considered an operation linked to unusual conditions.
It is important to keep in mind that, although it is not mandatory to register the contract in the Mercantile Registry, it is advisable that it be in writing and is well documented, especially if the company has several partners or if the loan has a high amount.
Legal limitations and tax warnings
Transferring money between partners and companies without following the legal channels can have important consequences. For example, if money withdrawals are made without justification, the Treasury can consider them covert remuneration, fictitious dividends or even misappropriation. This not only has fiscal consequences, but also criminal consequences in serious cases.
Therefore, every operation must have its documentary backing, accounting reflection and adequate tax treatment. It is essential to maintain the separation between the assets of the company and that of the partner, respecting the principle of legal personality of the company. Any transfer of funds must be carried out with transparency and under objective conditions.
Accounting aspects that must be taken into account
From an accounting point of view, all money transfers between partners and company must be correctly recorded. Partner contributions are accounted for in group 1 (net equity) accounts, while loans, whether in favour or against the company, are recorded in group 5 (debetors and creditors) or in group 2 if they are long-term.
In the case of salaries or dividends, they are recorded as expenses or distribution of results respectively. The correct accounting classification is essential to prepare faithful balance sheets, comply with legality and facilitate the presentation of taxes such as Corporate Tax or form 190.
Trust professionals to avoid mistakes
The legality and security of money transfers between partners and companies depends on good tax planning, adequate accounting and in-depth knowledge of commercial and tax regulations. Therefore, it is advisable to have professional advice that guarantees that each operation is carried out in accordance with the law and with the least possible tax impact.
Whether you are a partner of a company, or if you are an administrator or manager, carrying out these operations with transparency and legal support is essential to avoid future problems.
Orihuela Costa Advisory: experience and closeness for your peace of mind
At Asesoría Orihuela Costa we are experts in commercial, tax and accounting law. We help companies and freelancers to carry out operations between partners and companies in a safe, legal and efficient way.
We ensure that all transactions have legal support, the best possible tax treatment and a correct integration in your accounting.