Account 551: why you should not pay personal expenses with the company card
Account 551 (current account with shareholders) is one of the most common focus points in Tax Agency inspections of companies. If a shareholder withdraws money from the company for personal expenses, a debit balance arises that the Tax Agency may treat as a hidden dividend.
What are the risks?
- Taxation as investment income: the Tax Agency can reclassify those withdrawals as dividends (26% income tax).
- Deemed interest: if it is a loan, it must accrue interest at market rate.
- Non-deductible expense for corporate tax.
How to avoid it?
Best practice is to formalise a loan agreement at a market interest rate, or simply distribute dividends in an orderly way. At DPL Asesores we audit account 551 every quarter.