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Analysis by Garrigues, Taxand Spain
The Spanish Supreme Court has recently ruled that when tax authorities review credits from past years, they must fully regularise the situation – meaning that if they reject expense deductions, they must also remove related income from taxation.
The Court also addressed the 10-year review period introduced in 2015, which allows tax authorities to examine deductions from prior years during audits of non-prescribed years. However, the taxpayer’s ability to modify self-assessments remains limited.
Abelardo Delgado Pacheco from our Spanish member firm Garrigues has analysed this ruling in full here, emphasising that all favourable and unfavourable consequences must be considered during such audits, particularly when they involve linked income and deductions.
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