Paying yourself as administrator: why the statutes decide

Key rules

• Default: The administrator role is unpaid unless the statutes say it is paid and set out the pay system.
• General meeting: The general meeting approves the maximum yearly amount, and it stays valid until the meeting changes it.
• Vague clauses: A clause leaving pay to the meeting's discretion does not count as a pay system.
• Deduction: Pay without a valid statute clause risks being treated as non-deductible.

The short answer

The administrator role is unpaid unless the statutes say it is paid and set out the pay system, and the general meeting approves the maximum yearly amount. If you pay yourself without both, the payment can be challenged. Hacienda can also refuse to treat it as a deductible expense.

What the statutes must say

Your statutes need a clause that says the office is paid. It must also describe how. That means naming the pay concepts you will use, for example:

• a fixed amount
• attendance fees
• a share of profits
• variable pay or a bonus
• benefits in kind

If part of the pay is share-based, the clause needs the matching details too.

A vague clause is not enough. A wording like "paid or unpaid at the meeting's discretion" does not protect you, because the courts expect the statutes to be clear about the system. If your statutes say nothing about pay, treat the role as unpaid and change the statutes before you pay anything.

What the general meeting approves

Once the statutes allow pay, the general meeting of shareholders approves the maximum yearly amount for all administrators together. That amount stays valid until the meeting approves a change, so you do not need a new vote every year.

• Several administrators: unless the meeting decides otherwise, the administrators split the amount among themselves, taking their duties into account.
• Board with a delegated board member: the board must also approve a contract with that person.

Why this matters for tax

Administrator pay is deductible for corporate tax if it is booked as an expense, linked to the activity, properly documented and not a donation. A valid statute clause is the key point. Payments without a proper statutory basis have been challenged as non-deductible, being treated as a disguised profit distribution.

What to do, in order

1. Read your statutes and check whether they say the office is paid and set out the system.
2. If not, change the statutes first.
3. Have the general meeting approve the maximum yearly amount.
4. Keep the meeting minutes and any board contract with your accounting records.
5. Only then pay yourself.

The documents, checklist, warnings and questions below cover the details.

Documents you need

• Company statutes with a clause stating that the administrator office is paid, the pay concepts (for example fixed amount, attendance fees, share of profits, variable pay, bonus or in-kind benefits) and the pay system, written clearly and not left to the meeting's discretion.

• General meeting decision approving the maximum yearly amount of administrator pay. It stays valid until the meeting approves a change.

• Contract approved by the board with a delegated board member, only if the company has a board with a delegated member.

Checklist

• Read your company statutes and find out whether they say the administrator office is paid.

• Treat the role as unpaid if the statutes are silent, and pay nothing until they are changed.

• Ask the general meeting to approve the maximum yearly amount before you pay yourself.

What to watch out for

• Pay without a statute clause can be challenged: If the statutes do not set out the pay system, the tax office can treat your pay as non-deductible. It may see it as a disguised profit distribution. Add a clear pay clause to the statutes before you pay yourself, and keep the meeting's approval.

• A vague clause does not protect you: A clause that leaves pay to the meeting's discretion is not specific enough to make the pay valid. Name the pay concepts and the system in the statutes.

• Missing paperwork weakens the deduction: Pay is only deductible if it is booked as an expense, linked to the activity, properly documented and not a donation. Keep the meeting decision, the accounting entries and supporting documents together.

Frequently asked questions

Is a vague clause like "paid or unpaid at the meeting's discretion" enough?

No, a vague clause like "paid or unpaid at the meeting's discretion" is not enough to make the pay valid. The statutes must clearly say the office is paid and name the pay concepts, such as a fixed amount, attendance fees, a share of profits, variable pay, a bonus or in-kind benefits.

How is pay split when the company has several administrators?

The administrators set the split among themselves, taking into account their duties, unless the general meeting decides otherwise. The meeting only approves the maximum yearly total. If one administrator is a delegated board member, the board must also approve a contract with that person.

Do I need to approve the amount again every year?

No, the maximum yearly amount stays in force until the general meeting approves a change. You only need a new meeting decision when you want to raise or lower that amount.

What happens to my tax deduction if the statutes say nothing about pay?

The tax office can challenge the payments as non-deductible if the statutes have no valid pay clause. It may treat them as a disguised profit distribution. Add the clause to the statutes and have the meeting approve the amount.