The Supreme Court establishes that the Tax Agency cannot automatically apply the maximum penalty to self-employed individuals invoicing through a company without real activity. It requires proof of identity concealment to impose fines of up to 150%.
The Supreme Court has issued a ruling that changes the rules for self-employed individuals invoicing through companies. The ruling, dated June 4, establishes that the Tax Agency cannot automatically classify an infringement as very serious merely because it considers that the professional used a company without real means to pay less tax.
The economic difference is substantial. According to the ruling itself, a minor infringement implies a penalty of 50% of the amount not collected; a serious one, between 50% and 100%; and a very serious one, between 100% and 150%. Until now, the Tax Agency usually applied the highest rate directly in these cases, but the Supreme Court now requires an additional step.
The Tax Agency must justify real identity concealment
Ruling 695/2026 does not prevent the tax administration from reviewing corporate structures. If an inspector concludes that the company lacks employees, own means, or real activity, and that the services are actually provided by the individual, they can continue to attribute the income to the self-employed individual for income tax purposes. However, to apply the harshest penalty, they must prove something more.
As explained by Sandra Caballero, senior lawyer at Augusta Abogados, “the ruling does not eliminate the tax risk for these taxpayers.” The administration “can still reclassify the income and attribute it to the professional partner, apply the simulation figure provided for in Article 16 of the General Tax Law, and impose the corresponding penalties,” the expert pointed out. The novelty lies in the fact that the Supreme Court separates two issues that the Tax Agency frequently combined.
The court reasons based on Article 184.3.c of the General Tax Law, which considers it fraudulent to use intermediaries when the offender has placed assets, income, or operations in the name of a third party “with the aim of concealing their identity.” For the Supreme Court, this element cannot be presumed whenever a company exists, but must be proven in each case.
The maximum penalty can reach 150% of the debt
The specific case arises from an income tax inspection for the years 2014 to 2017. The Tax Agency understood that the company Jmanamat, S.L. did not have the personal and material means to provide the financial and accounting services it invoiced, so it attributed the income to the individual partner and sanctioned the conduct as a very serious infringement.
The economic leap occurs when moving from a serious infringement to a very serious one. Caballero explained that, to reach that level of penalty, “the Tax Agency needs something more than to demonstrate that the company was artificial. It must also serve to conceal who is really behind the activity or the income,” the lawyer stated.
This nuance is important for professionals who clearly appear as partners or administrators of the entity, submit declarations, have their relationship with the company identified, and have not resorted to third parties to formally appear as holders. In those cases, the inspection could discuss the taxation of the income, but could not apply the highest penalty without additional evidence.
The existence of front men or apparent partners will be key
The ruling clarifies that the application of the aggravating factor of concealment requires elements such as the existence of front men or apparent partners. That is, people who formally appear as holders of the company but who are not actually so, with the aim of making it difficult to identify the true professional.
For self-employed individuals operating with a single-member company and clearly appearing as administrators, the risk of maximum penalty is reduced. However, Caballero warns that “it is not a blank cheque.” The administration can still regularise the situation and demand payment of the corresponding taxes, plus late payment interest.
From a practical standpoint, self-employed individuals must review whether their structure has real means (employees, premises, own clients) and whether their identity as a professional is clearly linked to the company. In the event of an inspection, the key will be to demonstrate that there was no intention to conceal who was actually receiving the income.
The Supreme Court ruling represents a relief for many professionals, but it does not eliminate the tax risk. What changes is that the Tax Agency will no longer be able to automatically apply the maximum penalty. It must justify, on a case-by-case basis, that the self-employed individual used the company to hide their identity, and not just to optimise their tax bill.
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