How long do documents actually have to be kept?

Everyone knows this situation. Whether it’s mountains of files, old invoices, bank documents or tax returns. Anyone who hasn’t just started their own business a few years ago has to decide at some point what to do with old documents that – at least at first glance – are no longer needed.

The question then arises as to the legal but also the appropriate retention obligation or retention obligations, as there are several to consider.

Against this background, eight areas of regulation are important. These range from requirements under company law and commercial register law, to limitation periods under tax law and general limitation periods under civil law, through to criminal law limitation period issues.

As a result, it can be said that all documents should be kept for at least ten years, and ideally for 30 years.

I.) Accounting documents

The Spanish Commercial Code distinguishes between the actual commercial and business books and the accompanying reports or subordinate documents. In general, however, the rule of thumb is the provision of Article 30 of the Código de Comercio, according to which practically all business documents must be preserved for at least six years.

For example, the inventory or stock book or the cost journal (Libro Diario), as well as the account and invoice book with the annual financial statements (Libro de Inventario y Cuentas Anuales) must be kept for the entire existence of the company and for at least six years after its dissolution and liquidation (counted from the last entry in the respective books).

The annual financial statements, including the profit and loss accounts and balance sheets, as well as the annual reports and auditor’s reports and the reports and opinions of the managing director and any board of directors convened, must be kept for at least six years. However, for the sake of completeness and in view of the requirements described in the previous paragraph, these documents must also be kept for at least six years after the winding-up of the company.

II.) Documents relevant under company law

The minute books (Libro de Actas de la Junta General y del Consejo de Administración), the shareholders’ books in the case of a public limited company (Libro de Acciones Nominativas / Sociedad Anónima), the register of shareholders in the case of a limited liability company (Libro de Registro de Participaciones / Socios / Sociedad Limitada), the register of contracts between the company and the individual shareholder (Libro de Registro de Contratos entre la Sociedad y el Socio Único), as well as other books relating to company law, must be kept for the duration of the company’s existence and for a further six years thereafter.

The public deeds created in connection with the company, such as the certificate of incorporation, amendments to the articles of association, notarized shareholder resolutions, granting and withdrawal of powers of attorney, purchases of participations (Sociedad Limitada) or shares (Sociedad Anónima), real estate purchases, notarized purchases of movable assets, dissolution and liquidation of the company, and similar documents must be kept for the duration of the company’s existence – from a purely corporate law perspective – and until its dissolution and liquidation, as well as for at least a further six years thereafter. from a contractual or civil law perspective for as long as claims can be derived from the contractual relationships. In view of the fact that general contractual claims, which are not subject to a specific limitation period, expire after 5 years (originally 15 years, but now 5 years since the 2015 reform [but note the relevant transitional provisions]), but there is also a 20-year limitation period for mortgage creditor claims and a 30-year limitation period for property law claims to real estate, every relevant document should also be retained beyond the corporate law period of at least six years.

In principle, the same rules also apply to private documents relating to company law. These must also be kept for six years after the company has ceased to exist. If possible, the limitation period under civil law of up to 30 years must also be observed in order to be able to counter any civil law claims in an appropriate manner or to be in a position to enforce such a claim.

III.) Business documents

According to article 30 of the Spanish Commercial Code, in addition to the accounting books, a business must also keep correspondence, invoices, delivery bills, etc. in an orderly manner for at least six years after the last entry made in the respective book, unless special regulations specify a different period of time.

Contracts with suppliers, customers, transport companies, tenants, landlords, etc. as well as brochures, catalogs, advertising measures, etc. must therefore also be preserved for at least six years.

Here too, however, the advice is to take into account the limitation periods under civil law of up to 30 years with regard to any civil law claims that may have to be enforced, depending on the specific circumstances, and in case of doubt to keep the documents for just as long.

IV.) Taxes and tax office

The general tax limitation period in Spain is 4 years. The period begins at the end of the last day on which the tax could be declared and paid on time. This period is often interrupted by late declarations and payments, as well as by inspections by the tax office.

All tax-relevant documents must therefore be kept for at least four years after the end of the filing period. If the statute of limitations was interrupted for a longer period, i.e. four years after the conclusion of the tax audit procedure or the late submission of the declaration.

For example, as corporation tax is to be declared in July of the year ending in the financial year just ended, a tax-relevant event that occurred in May 2015 would only be taken into account in the tax return for 2015, which was to be submitted in July 2016.

As the ordinary statute of limitations does not start until August 1, 2020 (if it is not interrupted), there may be more than five years between the tax-relevant event and the statute of limitations.

However, in view of the possible criminal consequences of incorrect tax returns, it should be noted that all tax-relevant documents should be kept for at least ten years to be on the safe side.

Regulation EHA/962/2007, dated April 10, therefore provides for the possibility of having invoices, for example, digitally recorded by qualified service providers and provided with the same signature, in order to then only keep an electronic copy and have the original document destroyed.

As an important innovation from 2015, it should also be emphasized that the tax office can now review loss carryforwards for ten years, which is why, apart from the general 4-year limitation period, this significantly extends the control options and thus also extends the obligation to retain the corresponding documents.

As it is still possible to claim such loss carryforwards for up to 18 years, a possible review will also be extended in terms of time.

The same principle applies to amortization. As long as an investment is amortized, the corresponding documentation must of course also be retained.

V.) Criminal liability

In the case of punishable tax evasion as well as failure to pay social security contributions, the ordinary limitation period is five or ten years. In order to be able to document every tax and social security-relevant event accordingly, it is therefore advisable to keep such documents for at least ten years.

Since the statute of limitations for documentary offenses, embezzlement and fraud – the most common criminal offenses in the context of a business activity – regularly expires after ten years at the latest, the necessary documentation should also be preserved in
view of this.

The extensive regulations to combat money laundering and terrorism also mean that all economically relevant information must be stored for at least ten years.

From a criminal law perspective, it is therefore advisable to retain them for at least ten years.

VI.) Labor law

With regard to employment relationships (employment contracts, dismissals, etc.) and in view of Article 4.1 of Royal Legislative Decree 5/200, of August 4, by which the Law on Infractions and Sanctions in the Social Order was approved (Real Decreto Legislativo 5/2000, de 4 de agosto, por el que se aprueba el texto refundido de la Ley sobre Infracciones y Sanciones en el Orden Social), such documents must be kept for at least 3 years.

Due to the general obligation under company law to retain all documents relating to the company for at least six years, and in view of the impact that these documents can also have at another level, they should be kept for at least ten years.

VII) Social insurance

Article 4.2 of Royal Legislative Decree 5/200, of August 4th, which approves the Law on Infractions and Sanctions in the Social Order (Real Decreto Legislativo 5/2000, de 4 de agosto, por el que se aprueba el texto refundido de la Ley sobre Infracciones y Sanciones en el Orden Social), establishes the requirement to keep all relevant documents for 4 years.

However, the comments on labor law apply mutatis mutandis. From a company law perspective, storage is required for at least six years. However, due to any implications that may arise, the documents should be stored for at least ten years.

VIII.) Occupational health and safety

From the point of view of occupational health and safety, Article 4.3 of Royal Legislative Decree 5/200, of August 4, which approved the Law on Infractions and Sanctions in the Social Order (Real Decreto Legislativo 5/2000, de 4 de agosto, por el que se aprueba el texto refundido de la Ley sobre Infracciones y Sanciones en el Orden Social), requires all relevant documents to be stored for 5 years.

The comments on labor law and social security law with regard to the obligation under company law to maintain custody for a period of at least six years also apply here mutatis mutandis.