Tax solidarity in business collaboration contracts

When faced with the question of whether there is fiscal solidarity between the parties to a business collaboration contract for unpaid taxes, the answer does not seem to be very clear due to the ambiguity of the rule that establishes it and the way in which the legal provision is drafted in the Tax Statute ("E.T.").

Article 793 of the E.T. is the rule that establishes who is jointly and severally liable with the taxpayer for the payment of the tax. It establishes that such joint and several liability shall be borne by: On the heirs or legatees for the obligations of the deceased (pro rata to their inheritance quota and without prejudice to the benefit of inventory), on the subsidiaries of foreign parent companies when the latter has no branch in the country, on the absorbing company in merger processes with respect to the debts of the absorbed company, on the third parties that must cancel the obligations of the debtor, on the partners of "dissolved" (sic - meaning "liquidated") companies up to the amount of the value received in the corporate liquidation without prejudice to the provisions of Article 794 of the E.T. and, finally, on the subsidiaries of foreign parent companies when the latter does not have a branch in the country. T. and, finally, on "the holders of the respective patrimony (sic) associates or co-participants, jointly and severally among themselves, for the obligations of the collective entities without legal personality".

In turn, Article 794 of the E.T., called "Joint and several liability of partners for the taxes of the company", establishes that "in all cases the partners, co-participants, associates, cooperators, co-owners and consortium members shall be jointly and severally liable for the taxes, updating and interests of the legal person or collective entity without legal personality of which they are members, partners, co-participants, associates, cooperators and consortium members, pro rata of their contributions or participations in the same and of the time during which they have owned them in the respective taxable period".

From a first reading of these articles, it could be thought that fiscal solidarity is not applicable to those who are associated in a business collaboration contract, since it is not entirely clear that the provisions of Article 793 of the E.T., regarding that "the holders of the respective equity (sic) associates or co-participants, [are] jointly and severally liable among themselves, for the obligations of the collective entities without legal personality" is applicable to collaborative contracts. But, on further consideration, except for the participation in autonomous estates, there do not seem to be other vehicles other than collaboration contracts in which a taxpayer may be associated as a co-participant, and which give rise to an entity without legal personality.

Likewise, it could be thought that the application of article 794 of the E.T., since it is called "Joint and several liability of partners for the taxes of the company", should be limited to this sphere, that is to say, to the corporate sphere. However, from the reading of Article 31 of the Civil Code it is clear that the extension to be given to any law shall be determined by its genuine meaning and that "the favorable or odious nature of a provision shall not be taken into account to broaden or restrict its interpretation". Thus, regardless of the fact that its title restricts the application of the rule to the corporate sphere, its genuine meaning establishes that it is applicable to collaboration contracts.

Now, it is clear that article 794 of the E.T. would apply to consortiums (by express legal stipulation) and to joint venture contracts, since their members are partners of a collective entity without legal personality. It is not so clear, on the contrary, that this rule could apply to temporary joint ventures, because (contrary to what happens with consortia) although they are partners in an unincorporated entity, they are not listed as one of the taxpayers of a restrictive obligation.