BASQUE COUNTRY AND NAVARRA: What are fictitious liabilities?

Some companies try to hide their income by manipulating their accounting, thinking that the tax inspection will not detect it.

These are some examples

• Recording the inflow of funds from a sale as if it were a loan received from partners.
• Recording an expense while leaving the payment pending, attributing it to a non-existent supplier.

Both cases involve maintaining non-existent debts in liabilities, which persist over time, distorting the accounting and the company's image.

How does the tax authority detect this practice?

Easily. For example, because the inspection detects that the gross margin obtained by the company is much lower than that of its competitors or than declared in previous years, or because general expenses have increased without a corresponding increase in income.

What are the consequences?

If the tax authority discovers this practice, the only defense is to demonstrate that the undeclared income corresponds to already prescribed periods (that is, periods that the tax authority can no longer review). But if this is not possible, the applicable penalties will be very significant.

 

Our professionals are familiar with tax regulations and all applicable incentives, and they will advise you on how to reduce your tax bill while complying with the regulations and without the risk of penalties.