Tax audits that begin after 12 October 2015 will be subject to a special ten-year limitation period if they involve set-off of carried-forward losses or tax credits.
One of the most notable amendments in Spain's General Taxation Act, which came into force in October 2015, was the extension of the statute of limitations with regard to the Tax Authorities' right to audit, verify and investigate net operating losses (NOLs) or tax credits that are carried forward. Thus, a new ten-year period of limitations starts on the day after the deadline for filing the tax return for the fiscal year in which the tax credit was generated, instead of the general four-year period that would apply to such types of audits, if they are initiated after 12 October 2015; or earlier if a proposed assessment had not yet been notified to the taxpayer by 12 October 2015.
Consequently, and according to the new wording of the Act, in tax audits of a "general scope" (i.e. those that entail a general review of the tax concerned), the Tax Authorities must carry out the verification of all NOLs or tax credits that are pending application within the ten-year term envisaged by the Act; as it will not be possible to verify them again in later tax audits, even if they were not actually reviewed during the audit (preclusive effect).
In a recent report the Tax Authorities clarified that a "general scope" tax audit will only verify NOLs or tax credits set off in the tax period being investigated or pending set-off in the same period. Consequently, NOLs or tax credits set off in any other period preceding the one that is being audited (i.e. those that are "not pending set-off" in the year under investigation) and for which the statute of limitations has not run out, do not benefit from the preclusive effect and could be reviewed in another audit in the future.