What many companies are still getting wrong — and how to avoid unnecessary tax risks
Over recent years, we have seen a clear shift in how the Spanish Tax Authorities review corporate taxpayers. The focus is no longer limited to formal compliance; increasingly, inspections examine the economic substance and business rationale behind expenses.
Many companies meet their filing obligations and submit accurate tax returns, yet still face significant tax adjustments simply because certain expenses are not structured or documented appropriately.
The issue is rarely a lack of accounting support.
More often, it is the result of applying a purely compliance-based approach where a strategic tax perspective is required.
The most common mistake companies make: assuming every recorded expense is deductible
For limited companies, deductibility is not determined solely by the existence of an invoice or an accounting entry.
Tax authorities typically assess three key elements:
- the genuine connection between the expense and the business activity,
- the commercial justification of the cost,
- and the consistency between the company’s structure and its actual operations.
As a result, expenses that appear perfectly normal can still be challenged if they have not been properly structured from the outset.
Among the areas most frequently reviewed today are:
- vehicles used by shareholders or directors,
- personal expenses channelled through the company,
- poorly structured remuneration arrangements,
- mixed-use assets such as property,
- intra-group or cross-border services.
Company vs self-employed: where the real difference lies
Many businesses incorporate a company primarily to reduce tax exposure. However, the true advantage of operating through a company is not simply the corporate tax rate, it is the ability to structure business activity properly.
A corporate structure allows businesses to:
separate personal and business assets
design efficient remuneration strategies for directors and shareholders
organise expenses in a defensible and compliant way
structure investments and growth plans
facilitate international operations
These advantages only materialise when the structure is actively managed and aligned with the company’s strategy.
What is changing in tax inspections
Tax reviews are increasingly moving away from purely formal checks towards economic analysis.
The key question is no longer simply:
“Is there an invoice?”
but rather:
“Does this expense make commercial sense within this company?”
This evolution means accounting, tax planning and business strategy must now work together rather than operate independently.
Why many companies still overpay tax — or take unnecessary risks
In our experience, many companies fall into one of the following situations:
- accurate bookkeeping but no strategic tax planning,
- standardised accounting approaches that do not reflect the business reality,
- tax decisions taken without analysing long-term consequences,
- company growth without adapting the corporate structure.
The outcome is usually one of two scenarios:
paying more tax than necessary
or assuming avoidable tax risks.
The real advantage of working with a strategic adviser
Today, a tax adviser’s role should go far beyond filing returns.
The real value lies in anticipating decisions and structuring business operations correctly from the outset.
At EBF Consulting, we work with national and international companies helping them to:
- structure their tax position in a robust and sustainable way,
- align accounting with the economic reality of the business,
- optimise taxation within the legal framework,
- prepare companies for growth with confidence,
- and prevent risks before they arise.
Our approach integrates tax, accounting and strategic advisory, particularly for companies operating internationally or investing in the Canary Islands.
A key question for companies in 2026
Beyond simple compliance, the important question is:
Is your company’s tax structure supporting growth — or merely meeting quarterly obligations?
The difference between these two situations often determines both the long-term tax efficiency and the level of business certainty a company enjoys.
If you would like to assess whether your current structure is aligned with your company’s objectives, our team would be pleased to discuss it with you.
EBF Consulting
Strategic Tax & Business Advisory