Business law
Published on 26 June 2026
When I review a company, one of the issues that comes up most often is the incorrect Social Security classification of its directors and shareholders. It is common to find a relative of a shareholder working in the business who is wrongly classified, on an employment contract when the relationship should be a commercial one, or the other way round. People are rarely aware of what that mistake drags with it, before both the Social Security authorities and the tax authorities, with surcharges and penalties that are far from trivial and could have been avoided, and sometimes with the loss of a benefit entitlement.
It is not an administrative detail: the line between one regime and another determines what is paid in contributions, what can be claimed in future and what withholding applies on the payslip. It is worth being clear about it from the outset, not when the demand arrives.
The question usually turns on four variables: whether one is a shareholder and the legal form of the company (SL, SA, etc.); who holds effective control of the company; on whom the management and executive duties fall; and how the person in question is paid.
The one that weighs most is effective control. The General Social Security Act takes it as a given when the holding reaches at least half of the share capital, and presumes it, unless proven otherwise, from a third, or from a quarter where management and executive duties are also carried out, or where at least half of the capital is shared among cohabiting relatives up to the second degree (article 305.2.b of the same consolidated text). From there, this table summarises the most common cases in capital companies.
| Situation in a capital company (SL, SA) | Regime that applies |
|---|---|
| Director or board member with management and executive duties, paid, without control (holding below a quarter of the capital) | Assimilated to the General Regime, without unemployment cover or FOGASA |
| Director or board member without management and executive duties and without control (holding below a third) | General Regime |
| Director or board member who is not a shareholder, with paid management and executive duties | Assimilated to the General Regime, without unemployment cover or FOGASA |
| Working shareholder, without management duties and without control (holding below a third) | General Regime |
| Any of them with effective control: at least half of the capital; at least a third; at least a quarter where management and executive duties are carried out; or half of the capital held by cohabiting relatives up to the second degree | Self-employed (RETA) |
This is guidance, not a closed answer (articles 136.2.b, 136.2.c and 305.2.b of the consolidated text of the General Social Security Act): the presumption of control can be rebutted in both directions, and each case calls for its own analysis.
Whether you have already chosen a regime and want to review it, or the decision is still ahead of you, it is worth sitting down to look at it calmly before the matter is raised by the authorities. And it is worth knowing: both Social Security debts and tax debts become time-barred after four years (article 24 of the consolidated text of the General Social Security Act and article 66 of Law 58/2003, the General Tax Act), so a regularisation can reach back over that period.
These matters are decided in the detail. I reconstruct who really controls the company, what duties each person performs and how they are paid, check the classification against the applicable rule and, where needed, draw on employment and tax specialists to arrange the regularisation at the lowest possible cost. I do not sell certainties that do not exist: what I offer is a review done with method and the frankness to tell you where the risk lies.
If you are setting up a company or want to review the situation of your own, you can read how I handle business matters, or write to me for an initial assessment.
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