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Solidary tax liability for unpaid debts of the company

Not infrequently it happens, especially lately, that a company has outstanding tax liabilities

If the company has no traceable assets/income or, even if it has them, they are not sufficient to cover the outstanding tax liabilities, the tax authority may draw up and notify the company of an insolvency report.

The issuance of this insolvency report is a clue that often reveals the next step of the authorities: the issuance of the decision to hold other persons, mainly individuals, jointly liable for the company's outstanding debts.

These natural persons are usually partners/managers of the debtor company. What does joint tax liability mean? The assets of the partner/administrator will be seized to cover obligations which were originally only those of the company, but which now also belong to the partner/administrator in question.

Thus, despite the fact that the company is, from a legal point of view, a separate person from the shareholder/administrator, the law allows the tax authorities to pursue the assets of the latter (seizures, attachments, foreclosures, etc.) for obligations assumed by the company.

The legal basis on which such a commitment decision may be issued is Articles 25 and 26 of the Code of Tax Procedure.

What should we do if we are notified of such a decision to incur joint liability for the company's obligations? Bearing in mind that the decision constitutes, according to Article 26 para. (1) of the Code of Tax Procedure, it must be challenged within 45 days of the communication of the decision.

It is important to emphasize that this joint liability is exceptional and can be incurred in the limited situations provided for by the legislator, a conclusion which is also imposed by its nature as a sanction against persons who have acted in bad faith, by generating the insolvency of the debtor company. In other words, the mere fact that a company is in debt does not automatically make it possible for the shareholder/administrator to be obliged to pay the debts.

Unfortunately, in practice there have been many cases where the tax authorities have issued liability decisions without actually verifying whether the shareholder/administrator in question is guilty of one of the unlawful acts expressly provided for by law.

It should also be noted that liability decisions are not, in principle, reasoned by the tax authorities. Failure to state reasons renders the decision null and void and exonerates the shareholder/director from paying the company's obligations.

Having said that, we insist that more attention should be paid to this type of liability, which can have adverse consequences for the assets of the partners/administrator.

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