## [Tax authorities cannot deny offset of a tax asset if its correctness has been recognized in a firm judgment](/pt/en_GB/new/tax-authorities-cannot-deny-offset-tax-asset-if-its-correctness-has-been-recognized-firm)
# Tax authorities cannot deny offset of a tax asset if its correctness has been recognized in a firm judgment
Spain - 10 / 08 / 2018
[TAX NEWSLETTER - SEPTEMBER 2018](http://www.garrigues.com/en_GB/new/tax-newsletter-september-2018 "boton-newsletter")
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**The Supreme Court has confirmed that, after the correctness of a tax asset has been examined and confirmed, the tax authorities are not allowed to question its use in a later year, on the basis of the substantive 'res judicata' principle on which the court provided an interesting analysis.**
The Corporate Income Tax Law gives the tax authorities a ten-year period in which to review tax assets (net operating losses, deductions, etc.), running from the end of the voluntary filing period for the return on the year in which they were generated, regardless of when they are actually used. In practice, this review takes place sometimes when the year in which the assets were generated is audited, and at other times when the year they were used is audited. But in both cases the aim of the review is whether the taxable person correctly generated entitlement to the tax asset in the year it arose.
In a judgment dated June 26, 2018 (appeal 299/2016) the Supreme Court noted that after a tax asset has been accepted by the tax authorities or the courts it may not be questioned again in a different year.
The specific case examined by the court concerned a company that had generated a net operating loss as a result of amortizing financial goodwill that was recorded in a later year. In an administrative proceeding it was discussed whether that amortization was allowable (and also, therefore, the net operating loss it generated) but it was accepted, in a firm judgment, following the appropriate court proceeding. The auditors, however, questioned the subsequent use of that net operating loss by arguing again that the amortization was not correct.
Against this, the Supreme Court concluded that the substantive res judicata principle applies to the net operating loss, and therefore the authorities’ assessment in a subsequent year is null and void. The court recalled that substantive res judicata has a dual effect:
1. An adverse or exclusive effect, whereby firm judgments preclude a subsequent proceeding based on an identical subject-matter to the proceeding in which the judgment occurred.
2. A positive or pre-litigation effect, implying that the matter that has already been judged in a first proceeding becomes an unavoidable precedent of the later proceeding (if the decision in the first is the logical forerunner for the subject-matter of the second).
[Tax](/pt/en_GB/tags/tax)
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