How should companies face a tax audit or tax inspection in Spain?
There are different types of tax audits or inspections done by th Spanish Tax Office. However, they all serve to ensure that a company has paid its taxes correctly and in the correct amount within a certain period of time.
Whatever the reason for the tax audit, it is important that the company is aware of the measures to be taken to deal with the audit and to determine its scope.
Hardly any other field of law is as complicated as the subject of taxes. That’s why only a few companies survive a tax audit without additional payment. Only if you are well prepared you can face the deadline calmly.
The conduct of a tax audit can be of a general or partial nature. Unless expressly stated otherwise, it is usually a general tax audit.
If it is a partial tax audit, the company has 15 days to request the extension. In this way, once the inspection has been completed, it can be assumed that it is binding for all tax periods.
Measures in the event of a tax inspection
Upon receipt of the notification, the following actions shall be taken:
- verification of the tax situation and the status of the accounting documents.
This will make it possible to identify potential risks in advance and, if necessary, to attempt to resolve or reduce them.
- Review of significant operations or transactions.
Where operations of a special nature (e.g. corporate restructuring) are involved, it is important to carry out a thorough analysis of the transaction and its documentation.
- Preparation of the documents to be handed over.
Proper preparation of the documents to be handed over can facilitate cooperation with inspection.
- Review of administrative decisions in inspection procedures.
The administrative decisions must be carefully examined before any further legal action is taken and you also have to evaluate very carefully the effects of accepting or not the result of the inspection.
Although the visitors announce themselves in advance, they are very curious and ask their hosts probing questions. They look at internal documents and want to know many details. This costs the companies time and nerves, sometimes a lot of money. The effort for tax audits is worth it for the tax authorities. They are an important source of income.
Tax audits are a worthwhile business for the tax authorities, because even large companies with experienced specialists do not always find their way through the jungle of taxes. If a company gets a new legal form, changes or internationalizes its business model, introduces new IT systems, is restructured or taken over by the competition – almost always these steps have consequences for the tax authorities that are hard to understand. Danger lurks even in the case of longer business assignments abroad or when choosing the right VAT rate.
Tax audit and investigation measures can be complex for companies. It is therefore advisable to seek advice from specialists in tax matters.
It is expressly pointed out that you should not face a tax audit without professional support and advice from lawyers and Spanish tax consultants. If you are subject to a tax audit in Spain, we can assist you with our experience and knowledge. Our tax consultants will be happy to help you.