Tax audits and the four-year clock

Terms used

• Hacienda — Hacienda is Spain's tax authority, which checks returns and collects taxes.
• Modelo 720 — The Modelo 720 is the yearly declaration of assets held abroad.
• Verificación de datos — The verificación de datos is a simple check where Hacienda compares your return with the data it already holds.
• Comprobación limitada — The comprobación limitada is a limited check of specific items in your return, based on documents you provide.
• Inspección — The inspección is a full tax audit carried out by Hacienda's inspectors.
• Acta — The acta is the written record that closes an inspection, stating whether you agree or disagree.
• Recurso de reposición — The recurso de reposición is an appeal sent to the same office that issued the settlement.
• Reclamación económico-administrativa — The reclamación económico-administrativa is a claim against a tax decision, decided by an independent tax tribunal.

Key rules

• Restart: A formally notified action by Hacienda restarts the clock from zero, so note the date of every notice.
• Losses and credits: Carried-forward losses, credits and deductions can be checked for 10 years.
• Appeal deadline: You have one month to challenge a settlement.
• Foreign assets: Undeclared foreign assets no longer last forever; normal limitation applies.
• Time limits: A limited check lasts at most 6 months and an inspection at most 18, or 27 for large groups.

How long Hacienda can come after you

Hacienda generally has four years to assess a tax debt, and you have four years to claim a refund. The clock starts the day after the voluntary filing period ends. The timeline below gives a worked example.

The same four years also apply to Hacienda's right to demand payment of a debt already assessed. For a refund of tax you paid by mistake, the clock starts the day after you paid. For a refund that comes from a return, it starts when the filing period ends, or the day after you filed late.

What restarts the clock

Once the clock is interrupted, it restarts from zero. Four things interrupt it:

• Any action by Hacienda that is formally notified to you and aims to check, inspect, assess or settle the tax.
• Any appeal or court action.
• Anything you do to settle or self-assess the debt, such as filing a late or corrected return.
• Actions related to payment.

So a notice can keep a year open well beyond four years from the original deadline. Keep the date of every formal notice you receive.

Longer periods

Losses, credits and deductions you carry forward to later years can be checked for 10 years from the filing period. A year that looks closed can be reopened if you used a carried-forward amount from it.

Foreign assets have no special treatment any more. The old rule that undeclared assets abroad never expired, and the 150% fine, were removed after a European court ruling in 2022 and a law passed that year. Ordinary limitation and the normal penalties now apply to the Modelo 720 foreign-asset declaration. Undeclared foreign assets are also no longer automatically pushed into the oldest open year as unjustified income.

The kinds of check you may meet

Verificación de datos is the simplest. Hacienda compares the data in your return with what it holds and asks you to explain any mismatch. It is short.

Comprobación limitada is a limited check, usually run by the local tax management office. It starts with a notification and a request for documents. You may get a hearing, then a proposed settlement. It can last at most 6 months.

Inspección is the full audit. It starts with a notice or a visit, followed by requests for documents. It ends with an acta, which records either your agreement, your non-opposition or your disagreement. Then comes the settlement. It can last at most 18 months. For large groups, businesses with turnover above the audit threshold, and entities in a tax-consolidation group, the limit is 27 months.

If Hacienda runs over the limit, the debt does not disappear. But the earlier actions stop counting as interrupting the clock, and interest stops running at the limit.

If you disagree with a settlement

You can challenge it with a recurso de reposición, which goes back to the same office, or with a reclamación económico-administrativa, which goes to a separate tax tribunal. Either must be filed within one month of the notice, so act as soon as it arrives.

How long to keep your papers

• Returns and proof of the figures in them: at least four years from the end of the filing period.
• Papers behind losses, credits or deductions carried forward: 10 years from the period in which you used them.
• Proof of ownership and purchase price of property or shares: until you sell, plus the limitation period after you declare the gain.
• Business accounting books and their supporting documents: six years if you run a business activity.

Anti-money-laundering and social-security rules can set other periods. The documents list and checklist below show what to gather.

Timeline and deadlines

• Example: income tax for 2024, filed by 30 June 2025, can be assessed until 30 June 2029: from 1 July 2025 to 30 June 2029

• Limited check (comprobación limitada): notice, request for documents, hearing, proposed settlement: up to 6 months

• Inspection: notice or visit, requests, an acta, then settlement: up to 18 months

• Inspection of large groups, high turnover or tax-consolidation groups: up to 27 months

• Challenge a settlement with a recurso de reposición or economic-administrative claim: within one month of the day after notification

Documents you need

• Tax returns and proof of the figures in them, kept for at least four years from the end of the filing period.

• Supporting documents for losses, credits or deductions carried forward, kept for 10 years from the period in which you used them.

• Documents proving ownership and purchase value of property or shares, kept until you sell plus the limitation period after you declare the gain.

• Business accounting books and their supporting documents, kept for six years if you run a business activity.

• Papers requested by Hacienda during a check, the documents it asks for in its notification.

Checklist

• Keep documents behind losses, credits or deductions for 10 years from the period you used them.

• Keep proof of what you paid for property or shares until you sell, plus the limitation period after you declare the gain.

• Note the date of every formal notice from Hacienda, because each one restarts the four-year clock from zero.

• Check which type of procedure you are in (a limited check, an inspection or a simple data check) and its time limit.

What to watch out for

• Hacienda's actions restart the clock: Any formal action by Hacienda aimed at checking, inspecting or assessing your tax, and any appeal or payment action, interrupts the period, and it restarts from zero. A year you thought closed can stay open. Keep every notice with its date, and keep your records beyond four years if you have received any.

• Losses and credits stay open for 10 years: Hacienda can check negative tax bases, loss carry-forwards and credits for 10 years from the filing period, not four. Keep the supporting documents for the full 10 years.

• Old foreign-asset rules no longer apply: The old rule that undeclared assets abroad never expire, with a 150% fine, was removed. Ordinary limitation and the general penalty regime now apply, so do not rely on old advice. Ask a gestor which years are still open before you declare past assets.

Frequently asked questions

Does a late audit by Hacienda wipe out my tax debt?

No, an inspection that runs past its time limit does not cancel the debt. It does remove the clock-stopping effect of the earlier actions, and interest stops running at the limit. Hacienda may still act if the four years have not otherwise passed.

How long can Hacienda check losses carried forward?

Hacienda can check negative tax bases, loss carry-forwards and credits for 10 years from the filing period. This is longer than the ordinary period, so keep the supporting papers for that long.

Are foreign assets I never declared still unlimited in time?

No, undeclared assets abroad are no longer treated as never expiring. Ordinary limitation and the general penalty rules now apply, and the old 150% fine was removed after a 2022 European court ruling and a Spanish law change.

How long should I keep property purchase papers?

Keep papers proving ownership and purchase value until you sell, plus the limitation period after you declare the gain. These papers set the gain you pay tax on.