Misappropriation (apropiación indebida) in Spain: what it is, penalties and consequences

Misappropriation (apropiación indebida) is an offence against property that occurs when a person lawfully receives money, goods or effects from another under an obligation to deliver or return them and subsequently decides to keep them or to apply them permanently to a different purpose, causing loss.

In a business context it may arise, among other situations, where funds received for a specific purpose are withheld, sums belonging to the company are taken into personal cash, or goods entrusted for safekeeping are disposed of without the owner’s authorisation.

What are the elements of the offence of misappropriation?

The offence requires, in general terms, several elements:

• Lawful receipt: the money or property initially comes into the possession of the accused lawfully, for example under a contract, a professional engagement, a deposit, a commission, a debt-collection mandate or a commercial relationship.

• An obligation to deliver or return: the person receiving the property does not acquire the power to dispose of it freely. They must deliver it to a third party, apply it to a specific purpose or return it.

• A subsequent act of appropriation: the recipient acts as if they were the owner, keeps the property, hands it over permanently to another person or uses it for a purpose incompatible with the mandate received.

• Financial loss: the owner of the money or property can no longer dispose of it or is unable to recover it.

• Intent and intent to profit: there must be knowledge of the obligation to deliver or return and a will to obtain a benefit for oneself or for a third party. A mere accounting error, an isolated delay or a business difficulty does not automatically turn a breach into an offence.

Misappropriation may concern money, effects, securities or other movable property. In particular, there may also be misappropriation of money even if it is not the same notes or coins that were received, provided that the conduct involves a permanent disposal to the detriment of its owner.

What is the difference between misappropriation and breach of contract?

Not every breach of contract is misappropriation. In a business relationship it is common for a transaction to fail because of a lack of liquidity, supply problems, market changes or poor management. In such cases, the solution may lie in the civil or commercial sphere.

The criminal issue arises where there is evidence from which it can be concluded that the money or property was received under a specific obligation and that, at a later point, a definitive decision was taken not to deliver it, not to return it or to apply it to a purpose incompatible with the one agreed.

For example, if a company receives €20,000 on account to purchase a machine for its customer, does not make the purchase and does not return the money either, the legal characterisation will depend on the circumstances proven. It will be particularly relevant to know whether there was a genuine initial intention to perform, what the money was used for, what explanations were given and whether there was a definitive refusal or a knowing inability to repay.

By contrast, if a person managing another’s assets temporarily uses company funds for a risky or unauthorised transaction, but without any permanent disposal or intention to keep them, the facts may, depending on the case, fall within the offence of breach of fiduciary duty (administración desleal) under Art. 252 of the Criminal Code, and not necessarily within misappropriation. The practical difference lies in whether the owner has suffered a permanent loss of the property.

What is the penalty for misappropriation?

Basic offence

The basic offence is governed by Art. 253 of the Criminal Code. It concerns the appropriation of money, effects, securities or other movable property received on deposit, on commission, for safekeeping or under any other title that imposes an obligation to deliver or return it.

The penalty is determined by reference to those provided for fraud (estafa): imprisonment of six months to three years, taking into account, among other factors, the amount of the loss and the seriousness of the facts.

Where the amount does not exceed €400, a penalty of a fine of one to three months (day-fine system) applies in principle, unless a circumstance is present that triggers an aggravated form of the offence.

Aggravated forms

The penalty may be increased where any of the circumstances provided for aggravated fraud is present. Those most relevant to business activity include:

• the value of what was appropriated exceeds €50,000;

• the facts are particularly serious because of the extent of the loss or the financial situation in which the victim is left;

• they affect a large number of people;

• they are committed by abusing particularly significant personal relationships or by taking advantage of qualified business or professional credibility;

• there is recidivism in certain offences against property of the same nature;

• the value of the fraud exceeds €250,000.

In aggravated cases, the penalty may reach one to six years’ imprisonment and a fine of six to twelve months. Where certain particularly serious circumstances are present, or where the amount exceeds €250,000, imprisonment of four to eight years and a fine of twelve to twenty-four months may be imposed.

Applying an aggravating circumstance does not depend solely on the amount of money involved. The manner of acting, the relationship between the parties, the duration of the conduct, the number of victims and the degree of trust actually betrayed must also be examined.

Continuing offence

If several appropriations are carried out following the same plan or taking advantage of the same opportunity, a continuing offence (delito continuado) may be found. This may affect the penalty and the assessment of the total loss.

This is a significant risk in companies where small sums belonging to customers, suppliers, partners or employees are withheld periodically, rather than in a single isolated appropriation.

Can a company be criminally liable for misappropriation?

Art. 253 of the Criminal Code does not expressly provide for corporate criminal liability for misappropriation. Therefore, as a general rule, the company will not be criminally convicted of this offence as such. Criminal liability usually falls on the natural person who receives the property and decides to appropriate it, such as a director, manager, employee, agent or collaborator.

This does not mean that the company escapes all consequences. If the company has benefited from the conduct or has taken part in the facts, civil liability may be claimed, other offences that do provide for corporate criminal liability may be investigated, or consequences may follow for those who knowingly took part in the transaction.

In addition, a company may bear secondary (subsidiary) civil liability for offences committed by its employees, agents, representatives or managers in the performance of their duties or services, under the terms of Art. 120 of the Criminal Code. The assessment will depend on the relationship with the company, the functions performed and the specific circumstances of the case.

Civil liability and return of the property

A conviction for misappropriation normally entails an obligation to make good the loss. Civil liability may include:

• restitution of the property, where it can be returned;

• payment of the economic value of the money or item that cannot be returned;

• repair of the proven material damage;

• compensation for additional losses, including non-material (moral) damage where appropriate;

• any applicable interest and, where relevant, legal costs.

Where there are several liable parties, joint and several liability may be established among them under the terms provided by law. A person who, without having taken part in the offence, has benefited free of charge from its proceeds may also incur civil liability, up to the limit of what they received.

Where the injured party is a company, compensation is normally due to the company itself and not directly to its shareholders, because the company’s assets are separate from the personal assets of each member. The position may differ in exceptional situations, for example where the company has been wound up and the individual loss is clearly identified.

Practical example of misappropriation in a business context

A company receives €35,000 from a customer with instructions to purchase and install a production line. The person in charge of the transaction pays the money into an account they control, does not make the purchase and uses the funds to pay personal expenses and those of another related company. After several formal demands, they acknowledge the debt but neither return the money nor show that it was used for the agreed purpose.

The criminal assessment will depend on the evidence available, but lawful receipt, a specific purpose, the use of the funds for unrelated purposes and the definitive impossibility of repayment are factors that may be relevant in distinguishing misappropriation from a mere breach of contract.

Conclusion

Misappropriation does not punish every unpaid business debt. What is decisive is that the money or property was lawfully received under an obligation to deliver or return it and that a permanent appropriation or disposal subsequently took place to the detriment of its owner.

In practice, to assess whether there is a criminal risk, the contract or mandate, the purpose of the funds, the bank trail, the accounts, the communications between the parties, the demands for repayment and the actual use made of the money or property must be reviewed.

Subsequent repayment may be relevant to make good the loss and to the assessment of the consequences of the act, but it does not automatically eliminate potential criminal liability.

The legal characterisation depends on the facts proven and the evidence available in each case. This content is for information purposes only and is not a substitute for professional advice.

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