Tax losses audits of prescribed exercises

Abstract

This article analyses the limitations of the audits to assess negative tax bases from tax years whose legal auditing period has expired. According to the legal norms valid until 1999, the Supreme Court determined that such an audit was not possible, arguing that the tax losses was settled and could not be disputed when the auditing period had expired. After approval of a new norm (art. 23.5 of the Corporate Tax Act, extended through art. 106.4 of the General Tax Act, to any compensation or deduction of items from previous periods) establishing the need to prove the «origin and amount» of the negative tax base, the question arises of whether or not those norms allow for the Tax Administration auditing and what limits should such an audit have. This paper examines a selection of recent court decisions, ranging from the «Tribunal Económico Administrativo Central» (Economic and Administrative Court) resolutions that accept a full crosscheck, up to those of several «Tribunales Superiores de Justicia» (Regional Courts) which maintain that the only possible checking is to verify that the base has been included in the corresponding settlement, and between both stoods the «Audiencia Nacional» (National Court) criteria, that accepts the correction of tax losses in the case that «accounting errors» had been committed.