Commercial: Distribution Agreement: Fundamental characteristics and regulation in Spain

Tax: Exemption for reinvestment in the main home: Option or right of the taxpayer?

Disputes: Social liability action against the administrator

COMMERCIAL

Distribution Agreement: Fundamental characteristics and regulation in Spain

FLORENCIA ARRÉBOLA
Senior Associate

The distribution agreement has become a common tool in commercial practice, especially in sectors where manufacturers seek to expand their sales network without directly managing the relationship with the end consumer. The distribution agreement establishes a stable and long-term relationship: the distributor acquires products from the main supplier and resells them in a specific territory, often under conditions of exclusivity, supply commitments, or pre-established marketing guidelines.

Its unique characteristic lies in the fact that, despite its frequent use, it lacks specific regulation under Spanish law, making it an atypical contract. This regulatory gap is addressed through the principle of freedom of contract (Article 1255 of the Civil Code), the principles of the Commercial Code, and, in many cases, the analogous application of regulations concerning agency contracts. This lack of a regulatory framework has generated significant litigation, particularly regarding contract termination and any potential financial compensation that the distributor may claim for the clientele established during the term of the relationship.

The comparison with the agency contract is particularly illustrative. The agency contract does have its own specific regulations, through Law 12/1992, on agency contracts.

From a functional perspective, distribution and agency serve similar purposes: facilitating product penetration into the market through a third party that acts as an intermediary or marketer on behalf of a business. However, their legal structures differ substantially. The agent acts in the name and on behalf of the business, promoting transactions that directly generate rights and obligations for the latter. The distributor, on the other hand, acts in their own name and on their own account: they acquire the products and resell them, assuming the financial risk of the transaction. In other words, the agent is an intermediary, while the distributor is an independent businessperson who operates their own business based on resale.

This difference has significant practical consequences. In agency agreements, the law expressly establishes rights and obligations that limit the parties' freedom of contract, such as the obligation to act diligently, the right to commissions, compensation for goodwill upon termination, and minimum notice periods for contract termination. In distribution agreements, on the other hand, there is no equivalent legal framework: the existence of compensation, notice periods, and the validity of exclusivity clauses depend almost entirely on what the parties have agreed upon, and failing that, on what the courts decide on a case-by-case basis.

Consequently, the main difference between distribution and agency lies not so much in the practical aspect—since both contracts pursue similar commercial objectives—as in the legal aspect: agency is a typical and regulated contract, with a clear regulatory framework, while distribution is an atypical contract, which depends on what is agreed upon and the interpretation that the courts make in each dispute.

In any case, a distribution agreement offers certain advantages: it provides flexibility for both parties, allows the principal to outsource marketing costs, and grants the distributor a degree of autonomy in managing the business. However, it also presents drawbacks: for the principal, the risk of losing control over commercial policy; for the distributor, the vulnerability stemming from the lack of specific legal protection and the economic dependence on the principal.

January 2026

TAX

Exemption for reinvestment in the main home: Option or right of the taxpayer?

ALEJANDRO PUYO
Partner

Article 38.1 of the Spanish Personal Income Tax Act (IRPF) sets out the conditions for the reinvestment exemption for the main home. Thus, the capital gain obtained from selling the taxpayer’s main home is exempt from taxation, provided the proceeds are reinvested in buying a new main residence. The exemption is total when the reinvestment covers the full amount of the transfer and is made within the legally established deadlines and conditions. On the other hand, according to the second paragraph of the same provision, if the reinvestment is only partial, the exemption will apply proportionally.

This exemption was usually classified as a tax election under Article 119.3 of the General Tax Law (LGT). This meant that the exemption had to be claimed in the income tax return for the year in which the transfer took place. If it was not applied at that time, it was not possible to amend the self-assessment afterwards to claim the benefit. This is because tax elections must be exercised strictly within the statutory filing period and, except in exceptional cases, cannot be modified later.

However, on 31 March 2025, the Central Economic-Administrative Tribunal (TEAC) ruled that, in the absence of a genuine choice between two incompatible tax regimes, the exemption cannot be considered a tax election. In line with Supreme Court case law, the TEAC ruled that the reinvestment exemption for gains obtained from the sale of the principal residence constitutes a taxpayer’s right and not a tax election under Article 119.3 of the General Tax Law. This is because the rule does not provide a real alternative between distinct, mutually exclusive tax regimes that would justify the concept of an 'election'.

The TEAC concluded that the reinvestment exemption is not a tax election under Article 119.3 of Law 58/2003 (General Tax Law), but rather a right that taxpayers may exercise when filing their personal income tax self-assessment for the year in which the gain arises, or by requesting an amendment to the original self-assessment at a later date.

It should also be noted that this decision was issued in the context of an appeal for the unification of criteria. This means that, under Article 242.4 of the General Tax Law, the adopted interpretation is binding on the entire Tax Administration.

It should also be noted that this decision was issued in the context of an appeal for the unification of criteria. This means that, under Article 242.4 of the General Tax Law, the adopted interpretation is binding on the entire Tax Administration.

Accordingly, as it is now considered a taxpayer's right rather than a tax election, the deadline for amending an income tax return is no longer restricted to the statutory filing period of the year in which the gain was obtained. Instead, the general four-year statute of limitations applies, counted from the end of the relevant return's statutory filing period.

January 2026

DISPUTES

Social liability action against the administrator

ANTONI FAIXÓ
Partner

In previous articles, we analyzed the different actions that can be brought against a company administrator for harmful acts: individual action, which can be brought by partners or creditors in a personal capacity for their own prejudice; corporate action, which can be brought by partners for damages to the company; and liability arising from public administrations.

Just over a year ago, the Provincial Court of Madrid handed down judgement no. 6/2025, dated January 10th 2025, in which it dismissed the corporate action against the director for lack of an objective requirement, namely the lack of minimum content in the Shareholders’ Meeting Agreement to identify the director’s theoretically irregular conduct and the damage caused.

This ruling explains that, although the legal norm does not expressly require this minimum content in the Shareholders’ Meeting agreement to initiate the corporate liability action, the case law of the Supreme Court and the Provincial Court of Madrid itself had interpreted that minimum content is necessary so that the Administrator can know what he is accused of in the agreement or initiate the action, without a generic agreement without details being valid.

In light of this case law, we can observe that the action for social responsibility has the following requirements:

1. That there is an agreement approved by ordinary majority in a Shareholders' Meeting to initiate said action against the Administrator.

2. The agreement must have a minimum content, meaning it must identify the allegedly improper actions of the Administrator and the harm caused to the company, even if only briefly. What is not permitted is a generic agreement, one that merely states the Administrator acted improperly and harmed the company, without further detail, and then provides the specifics in the lawsuit. This is the scenario in the aforementioned ruling, and in that case, this requirement is not met.

3. The partners must act in good faith, meaning they agree to file the claim without having legitimized the Administrator's irregular actions through their own actions. In other words, if the partners were aware of these potentially irregular actions and had accepted, approved, or participated in them through their own actions, they cannot then agree to a corporate liability action for those same actions.

4. That there is a "social interest", that is, that the claim seeks to repair a damage caused by the actions of the Administrator to the achievement of the purpose of the social object, which will normally mean repairing an economic damage, since all companies intend to create a business to obtain profits, but which can have a broader scope, such as repairing a reputational damage.

As we can see, the action of social responsibility is more complex than it seems in its legal regulation, which is minimal, since jurisprudence introduces requirements for its exercise, which are reasonable but which can be difficult to interpret in terms of their detail and scope.

January 2026