CNB Ruling vs. BOFiP on Compensation for Partners in SELs

Yesterday, the Council of State issued its ruling on the appeal for abuse of authority filed by the CNB to challenge the administrative comments published in the BOFiP on December 27, 2023.

In its decision, the Council of State states that:

• The compensation paid to a majority manager of a limited liability company subject to corporate income tax or of an SCA in connection with the personal practice of his or her independent professional activity does not fall within the scope of Article 62 of the General Tax Code.

• Compensation for this activity,“depending on whether the conditions under which the activity is performed reflect the existence of a relationship of subordination to the company,”is classified as wages and salaries or business income.

• With regard to compensation for the position of manager:

  • The Council of State held that the BOFiP could not have provided that tasks such as“billing clients or patients, collecting payments, scheduling appointments, ordering supplies, and managing staff” are linked to the duties of a manager“in general and under all circumstances.” It overturned the BOFiP on this point.

  • It also repeals the BOFiP, which provided that, as a rule of thumb, 5% of the compensation received by managers could be considered to be related to their role as managers.

• The Council of State further clarifies that the comments regarding the determination of the thresholds for the micro-BNC regime for managers are not unlawful.

EC, 8th and 3rd Chambers, April 8, 2025, No. 492154, Unpublished