Full Tax Regularisation: Key Analysis for Tax Advisers

Technical Analysis of the Full Tax Regularisation Principle after Supreme Court Judgment 1184/2023

1. Introduction: What is full tax regularisation?

The principle of full tax regularisation means that when the Tax Administration corrects a self-assessment, it must take into account all the interrelated elements of the tax. This means not only increasing the taxable base or tax due, but also applying all deductions, offsets or tax benefits to which the taxpayer was entitled in the same action.

The principle is grounded in the administration’s duty to apply the law fully and consistently, avoiding unjust enrichment.

2. Supreme Court Judgment 1184/2023 of 21 September

Case summary: The Tax Inspection adjusted a company’s tax position because it had failed to declare certain income, but omitted expenses and offsets to which the taxpayer was entitled. The case reached the Supreme Court.

Rule established: The Supreme Court held that:

“The administration cannot merely increase the tax debt; it must calculate all the elements that correctly determine the tax liability, including those in the taxpayer’s favour, when they are evidenced by the same inspection.”

Legal basis: Articles 66 and 71 of the General Tax Law (the principle of legality and the duty to fully correct administrative acts).

3. Practical implications for tax advisers

Common practical cases:

• Companies that forgot to use tax-loss carryforwards.
• Adjustments for undeclared income that fail to include the related expenses.
• Exclusion of double-taxation relief from inspection assessments.

4. Recommendations for advisers

• Document preparation: Provide, during the inspection, all information on expenses, offsets and deductions that may apply.
• Monitor the scope of the case: Check that the Tax Agency is examining the correct period and items, and insist on a complete adjustment.
• Use case law strategically: Cite Supreme Court Judgment 1184/2023 expressly in submissions, appeals and complaints.
• Monitor refunds: Claim overpaid tax if the Tax Agency omits tax benefits to which the taxpayer is entitled.

5. Conclusion

Supreme Court Judgment 1184/2023 is an important step in consolidating taxpayers’ rights and the administration’s obligation to act objectively. It strengthens the tax adviser’s role in ensuring that tax adjustments are complete and provides a solid basis for challenging incomplete or partial assessments.

6. Visual outline: Full tax regularisation

Correct tax review

Omitted income (+)
Deductible expenses (-)
Tax loss offsets (-)
Applicable deductions (-)
= Adjusted tax due

Partial assessment (not permitted)

Omitted income (+)
= Increased tax due (without adjustments or deductions)

Full regularisation (correct)

Omitted income (+)
- Deductible expenses
- Applicable offsets and deductions
= Tax due adjusted and calculated according to law

Read the original article in Spanish