Claim for the Refund of Undue Income due to Incorrect Classification in the CNAE. Real Case

Claim for the Refund of Undue Revenues due to Incorrect Binding in the CNAE. Real Case
Published on: 23 February 2022

Table of contents

The CNAE and the contribution rate for companies

The national code of economic activities also known as CNAE determines the contribution rate for companies, and this is something that should not be overlooked as incorrect registration or classification in one or the other can result in the payment of significant amounts and differences in the amount to be paid in Social Security contributions. We should not forget that the same negative effect may have occurred in the transposition of the codes of economic activities, which can lead to incorrect classification in the CNAE and which could also be causing significant economic damage to companies.

The correct classification of the Cnae and the payment of Social Security contributions

Our employment law firm stresses that it is very important when registering a company with the Social Security to correctly classify the company and to define exactly the activity to which it is dedicated, as an error of this type, which may initially go unnoticed, can cause a lot of economic damage to the company, as in the case of an important multinational company, a client of our law firm.

Many times these errors are caused by the unfortunate habit of establishing too broad corporate objects in which not all the activities defined in the Articles of Association are actually carried out.

Judicial claim for the refund of undue income

Recently, in proceedings handled by this Law Firm and led by the Lawyer of the Madrid Bar Association Mr. Vicente García Elías, and whose execution took place in November 2021, an important client company of our Law Firm started a procedure for the correct classification in the CNAE, as, due to the corporate purpose that appeared in the Articles of Association, we considered that it had been quoting in an incorrect epigraph since practically the beginning of its activity.

After changing the CNAE in the Social Security, we initiated a procedure, initially of an administrative nature, in which we requested the refund of undue income for the years not prescribed, i.e. the 4 previous years, which amounted to a very significant amount.

The claim was presented to the General Treasury of the Social Security where the different work centres of the company were located throughout Spain, of which there were several.

As a result of the initial rejection of the application and the corresponding appeal, it was necessary first to exhaust the corresponding administrative appeals, and then to file the corresponding contentious administrative appeal, which was processed before the Contentious Court of Madrid. This appeal, which was processed under the ordinary procedure, was assisted by a lawyer and represented by a practising solicitor.

Upholding judgement: refund of undue income incorrect Cnae

After the appropriate proceedings, which began with a lawsuit, in the evidence phase of the procedure, our efforts were focused on proving the true activity of the company, which had been carried out practically since its incorporation, and after justifying the incorrect payment of Social Security contributions as a consequence of the incorrect registration, a judgement was handed down upholding the claim in which the General Social Security Treasury of Madrid was ordered to pay the incorrectly paid contributions plus the special interest provided for in the General Social Security Law.

Despite the favourable judgement, and after one month due to the special privilege of the administration in the enforcement of judgements, enforcement proceedings were initiated against the Social Security General Treasury in which, after the appropriate incident, the administration was ordered to pay the excess social security contributions paid by our client in respect of all the years for which the claim was made and which were not time-barred.

The multinational company had different work centres in Madrid and in the rest of Spain, which is why it was necessary to initiate proceedings in each city and for each contribution account code.

Despite the laboriousness of the procedure, the results have been highly satisfactory for the interests of our client, having recovered amounts exceeding more than one million euros.

G. Elias y Muñoz Abogados has employment and administrative lawyers specialised in claiming amounts for the refund of undue income, so any company that considers that it may find itself in any of the situations described in this case should contact us in order to initiate the corresponding procedure.

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