27 October, 2015

When can companies eliminate justifying accounting document?

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Prior to eliminating any justifying accounting document and if your company has any pending tax losses or credits, you should take into account that the Spanish tax authorities have a 10 year term to review them.

With the recent changes to the Spanish General Tax Law (Ley General Tributaria) it has been clarified how to compute such term.

✔ Although the statute of limitations in Spanish taxes is, generally speaking, of four years as from the end of the filing term, there are tax measures that, in practice, extend such term and that we should take into account in order to keep our tax and justifying accounting document records.

✔ For fiscal years starting from Jan. 01, 2015, the Spanish tax authorities have a ten years term to start the review (and eventual modification) of tax losses, double taxation tax credits or investment tax credits.

✔ With the changes operated in the Spanish General Tax Law, it has been made clear that the term to start the review, not to review, as it had formerly been regulated, is time-barred within ten years, which have to be computed as from the next day to the end of the term to file the tax return corresponding to the fiscal year in which the tax loss or credit was generated.

This means that, for companies having a fiscal year coinciding with the calendar year, the review can start within 10 years, to be counted as from the next day to July 25th of the fiscal year subsequent to that of declaration.

✔ Beyond such term, Spanish companies willing to apply such incentives are still obliged to accredit such incentives, by exhibiting the tax return and the justifying accounting document statement for the fiscal year concerned, proving that the accounts have been deposited at the Mercantile registry during the ten years term.

Given these important consequences, it is advisable taking into account these rules, prior to eliminating any tax or accounting document.

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