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How Long Should You Keep Your Invoices?
How long should you keep your invoices?
It is possible that at this time of the year, it has occurred to you to clean up the “papers” that you had saved, starting with the invoices from previous years.
This article will explain the legal deadlines for saving all the documentation related to your activity. Let’s go with the details…
Table of Contents
Commercial Code deadlines
If you run a company, you know that you must keep all the documents related to it. The general term is 6 years from the last entry of said exercises (the closing entry), although it is sometimes longer.
Why should you keep your invoices?
Invoices, as you well know, are legal document that defends the following:
- That you have done a particular job, to which client and when.
- In addition, they recollect information about the client who has paid you for this work (or at least was entitled to pay). Thanks to the issued invoice, you can claim it if you have yet to collect it.
- Gives information about the applied VAT and withholdings.
Therefore, the primary function of invoices is conflict resolution.
General term to keep your invoices and other documents
According to commercial regulations, you must keep your invoices for at least 6 years:
1. Accounting books (look at the required books the self-employed must keep).
2. Correspondence with customers and suppliers.
3. Supporting documents and documentation related to your activity.
If we consider that 6-year period, on January 1, 2023, you could destroy everything mentioned above that belongs to the year 2016 or earlier and make room for what is to come.
Exceptions to the general rule
Of course, you should know that there are some exceptions:
- Treasury establishes a period of 4 years to review your documentation. For example, June 30, 2023, is the last day the Treasury can check your 2018 income statement.
- But tax regulations increase it to more than 6 years, so we advise keeping all the documents longer.
Exceptional cases in corporate tax
Let’s say you have detected an incident in corporate tax for future years. In this case, you can get rid of the documentation once the exercises have been reviewed.
VAT exceptions (keep your fixed asset invoices)
Regarding VAT exceptions, if you purchase fixed assets for your activity for an amount greater than 3,005.06 euros, you must keep the invoices:
1. A minimum of 9 years if they are goods furniture.
2. And in the case of real estate, a minimum of 14 years.
If any operation had incidents in VAT returns for future years, you must keep the documentation until they can no longer examine those years.
How long should you keep your invoices if you make losses?
Only in the case of companies (“Sociedades”) will the Treasury establish a period of 10 years if a year makes losses or generates a negative tax base, as well as if you generate deductions that have not been applied.
After those 10 years, if the deductions and negative tax bases are still pending, you must keep the following:
1. the declaration of the year corresponding to its generation.
2. accounting for the same financial year.
In the case of the self-employed, the Commercial Code we explained before applies.
Problems with the Treasury
The phrase “Tax inspection” or “Tax check” makes the skin crawl of any business person. We will see the general rule and how the Treasury can “extend” it to inspect you for much longer.
The term proposed by the Treasury, 4 years, can be interrupted either by your company or the Administration. The interruption may be due to the following:
- You disagree with what Hacienda had returned to you from the income statement.
- The Treasury decided to review your 2018 income and sent you the letter on June 10, 2023.
As a result of the interruption, the term begins to count another 4 years from the moment of the communication that interrupted it.
A recommendation from our experience
We recommend you to do everything related to your economic activity correctly and without resorting to fraud. Review your deductible expenses and ensure everything you include in your accounting is reasoned and correct from the beginning.
A practice we have seen in recent years is that the Treasury reviews the declarations (whether income, VAT, or any other) when the 4-year term is almost over. In many, they find discrepancies.
Example of discrepancies
For example, the invoices do not match the bank movements, that you have gone to a congress abroad to give a talk, and you must reason those deductible expenses. And already absurd concepts such as “tailor-made suit” or “Ikea ticket”, etc.
Once they find discrepancies in said tax check, the Tax Agency reviews all the returns they can in the 4 years that remain. In this way, the period of another 4 years to save all the documentation opens.
To conclude…
Knowing the deadlines is essential if you want to avoid headaches. If you decide to do cleaning, order everything in folders and keep them in a closet. Although they take up space, they are your insurance in case of verification and can save you a lot of money.
With Selfemployed Spain’s platform, all your tax documents are stored in one place. You can download them in Excel, the format requested by the Treasury in case of tax checks.
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