The judgment of the Spanish Supreme Court of 7 October 2025, no. 1244/2025, leaves a very clear impression: in tax matters, time does not just pass, it also closes doors. It deals, with considerable precision, with what happens when a company tries to reopen old tax years to use expenses in its favour and how limitation periods operate as a real legal wall.

The case arises during a corporate tax audit for 2011 and 2012, when the company asks to amend its returns for 2001 to 2010 in order to include rental expenses booked in 2012 but actually relating to those earlier years. On paper the idea seemed straightforward: increase the negative tax bases of past periods and thus improve its current and future tax position.

The tax authorities, however, put an abrupt stop to that plan. They consider the years 2001 to 2007 time‑barred and hold that the expenses linked to those periods can no longer play any role in determining the tax debt. They even go one step further and adjust the negative tax bases of 2005 and 2006 downwards, which of course heightens the conflict.

The company does not give up and lodges an appeal relying on principles that resonate strongly in tax litigation: the principle of full regularisation, the prohibition of unjust enrichment by the tax administration and the principle of good administration. At heart, the company is saying that it is not fair for the tax authorities to benefit from the whole picture while refusing to correct the parts that harm the taxpayer.

The Supreme Court, however, takes a different view and recalls that the legal system also protects something extremely valuable: the legal certainty provided by limitation periods. It therefore draws two clear lines around the powers of the tax authorities. First, facts affecting negative tax bases may only be reviewed for ten years from the end of the filing period for the year in which they arose. Second, any audit can only change bases or tax credits corresponding to years that are not time‑barred.

The Court also pauses on an issue that, in practice, often creates confusion: how to deal with accounting adjustments relating to prior years. It points out that, under accounting standards, such adjustments must be recognised in the year in which they are recorded, and that accounting cannot be used as a kind of “time machine” to reopen periods that are already closed.

The doctrine finally laid down by the Court is firm: income or expenses recorded outside their accrual period cannot be used to modify the tax bases of years that are already statute‑barred. Put differently, once a tax year is protected by limitation, its tax debt becomes untouchable, even if accounting entries appear later that “look back” to that year.

This conclusion may feel frustrating for taxpayers who sense they have lost a legitimate opportunity to optimise their tax burden, but it sends a very clear message: the system needs an end point so that neither the tax authorities nor taxpayers live in a state of permanent review. In the end, the judgment reinforces the idea that limitation is not a mere technicality but a guarantee that structures time, stabilises tax relationships and sets clear boundaries for both the administration and those who, years later, would like to rewrite the story of their taxes.