The tax office asks you to justify cash paid into your account

The case, in five lines

What is brought

Defence against an adjustment for an unexplained capital gain under article 39 LIRPF: answering the request and making submissions with proof of the origin of the funds, followed by a reposición appeal or an economic-administrative claim and a contencioso-administrativo claim against the provisional assessment and, separately, against the penalty.

Before which court

The Agencia Tributaria (the management or inspection office carrying out the review); then the TEAR (Tribunal Económico-Administrativo Regional, the regional tax tribunal) and, once that route is exhausted, the Sala de lo Contencioso-Administrativo (the administrative chamber) of the Tribunal Superior de Justicia (the regional High Court) under article 10.1.d) LJCA, not the contencioso-administrativo section of the Tribunal de Instancia (the first-instance court). The prior attempt at settlement required by article 5 of LO 1/2025 does not apply, since it governs civil cases only: the prior requirement here is to exhaust the economic-administrative route.

Deadline

The tax authority's right to assess becomes time-barred after four years, counted from the day after the end of the filing period for that year's income tax return (articles 66 and 67 LGT); as at 28 September 2026, and barring interruption, 2022 to 2025 remain open. The limited review lapses six months after notification of its commencement (article 104 LGT). Against the assessment: one month from the day after notification for the reposición appeal or the claim (articles 223.1 and 235.1 LGT) and two months for the court claim (article 46.1 LJCA). These are strict deadlines: once they pass, the assessment becomes final.

Who can bring it

Claimant: the taxpayer to whom the gain is attributed and, where the account is shared or the couple is married under the community property regime (gananciales), each holder for their own share. Defendant: the Administración General del Estado (the State administration), acting through the Agencia Tributaria, whose decision is defended in court by the Abogado del Estado (the State Attorney).

Financial risk

If you lose, you pay the tax resulting from adding the amount to your general base, at your marginal rate, with late payment interest, and usually a penalty under article 191 LGT, which with concealment and a penalty base (the unpaid tax) above 3,000 euros is serious (50 to 100 per cent). Challenging the debt does not suspend it without security. In court proceedings costs follow the event, and the court usually caps them at a maximum figure. If the tax evaded in a single year exceeds 120,000 euros, the matter may move to the criminal courts.

An unexplained gain is not a fine: it is income taxed at your marginal rate

Article 39 LIRPF treats as unexplained capital gains any assets or rights whose holding, declaration or acquisition does not match the income or assets declared. A balance that appears in your account without support in what you have declared fits squarely: money on deposit is a claim against the bank and, if nothing explains it, the law treats it as income received.

The consequence is harsh. The gain is added to the general taxable base of the period in which it is discovered, not to the savings base: it is stacked on top of your salary and taxed at your marginal rate, with late payment interest. It is also a residual category. If the origin is known and it is some other taxable income, it is assessed as that income: explaining that the cash came from private lessons or from a rental does not save you, it swaps one problem for another that is also taxed and also penalised.

The tax office did not find this by chance. Article 38.1.b) of the tax management and inspection regulations requires banks to report every cash deposit or withdrawal above 3,000 euros, with its date, the account and the identity of the person making it. Since 2026 banks also report monthly on accounts and on Bizum payments received by businesses and professionals. That is why the request arrives with exact dates and amounts, and it must be answered with the same precision.

The tax office proves the fact first; then it is for you to explain the origin

Article 105.1 LGT places the burden of proof on whoever asserts a right. Here it is split into two stages: the authority must prove the underlying fact, namely that the money entered an account you hold and that it does not match your declared income; once that is proved, the presumption in article 39 applies and it is for you to rebut it. Article 108.1 LGT confirms that statutory presumptions can be rebutted by evidence to the contrary.

The Tribunal Supremo (the Supreme Court) has held that it is not enough to say where the money came from. To rebut the gain you must prove three things: by what means it arrived, who transferred it and for what reason, that is, the legal transaction that explains it (loan, gift, sale, inheritance). A statement from your mother that she gave you money, with no bank trail showing she had it and withdrew it, remains an assertion that no court will turn into proof.

There is a tool almost nobody uses. Article 105.2 LGT treats the duty to prove as fulfilled when the taxpayer specifically identifies evidence already held by the authority. If your mother withdrew 20,000 euros in notes, that withdrawal appears in her bank's information return with her tax number and the date; if you sold a property years ago, it is in your own return. They are pointed out precisely and the agency cannot ignore them.

Money you already had before the time-barred period is not taxed, if you prove it

The second paragraph of article 39 LIRPF contains the least known way out: the gain is not taxed if the taxpayer sufficiently proves ownership of those assets since a date before the limitation period. Article 66 LGT sets that period at four years, and article 67.1 LGT counts it from the day after the end of the filing period. As at 28 September 2026, and barring interruption, income tax for 2021 is already time-barred.

The difficulty lies in the standard. Saying that it was savings kept at home does not persuade without support, and the courts reject it time and again. What works is the cash circuit: statements from earlier years showing cash withdrawals of consistent amounts, the sale of an asset paid in cash in a year already time-barred, an inheritance with cash listed in the inventory. The closer the dates and amounts between what went out and what came in, the stronger the evidence.

It is also worth knowing what no longer exists. Until 2022 the same article had a second paragraph that attributed to the oldest year not yet time-barred any foreign assets not reported on form 720, even if acquired in time-barred years. Following a judgment of the Court of Justice of the European Union, Ley 5/2022 removed it. If the cash comes from savings built up in another country, the general rule now applies and the limitation defence is available again.

Loan, gift or sale: the paper that persuades and the paper that sinks you

Article 106.1 LGT refers to the rules of the Civil Code and the Civil Procedure Act for weighing evidence, and that is where the trap of the private document lies. Article 1227 CC provides that its date does not count against third parties, and the tax authority is one, except from when it is entered in a public register, one of the signatories dies, or it is handed to a public official acting in that capacity. A loan agreement signed today and dated two years ago proves nothing.

And it is worse than useless if it is fabricated. A backdated document is a falsified document, and article 191.3.a) LGT classifies the infringement as serious, whatever the amount, where false or falsified receipts or documents are used, quite apart from criminal liability. What does work is the truth, properly documented: the lender's bank trail, later repayments by transfer, the loan filed at the time with the regional office for transfer tax, where it is exempt, or a notarial deed.

A gift calls for a strategic decision. If your mother gave you the money, justifying it as a gift shifts the tax to the Impuesto sobre Sucesiones y Donaciones (inheritance and gift tax), which the recipient pays and your autonomous region manages, with reliefs that are very generous in many regions but often require a notarial deed. It usually costs far less than an unexplained gain, but it is measured before it is argued, because that explanation leaves a trail and the region may later assess the gift tax that was never filed.

Joint account or community property: the gain need not be all yours

Article 11.5 LIRPF attributes unexplained capital gains according to ownership of the assets or rights in which they appear. Being a joint holder of an account does not make you the owner of everything paid into it: ownership of the money depends on who contributed it, and an authorised signatory is not a holder. Where the cash belongs to another joint holder, such as an elderly father who pays into the shared account what he withdrew from his own, that is proved and the attribution falls away or is shared.

If you are married under the community property regime, article 1361 CC presumes that assets existing during the marriage are community property unless shown to belong privately to one spouse. The Tribunal Supremo held in 2025 that, where an unexplained gain surfaces in the couple's assets, the authority cannot attribute it wholly to one spouse without proving it is private property: that presumption applies and the gain is split in half. Where each spouse files separately, splitting the base lowers the rate, although the other spouse will receive their own assessment.

Article 108.3 LGT allows the authority to treat as owner whoever appears as such in a tax register or other public register, unless the contrary is proved, and article 11.3 LIRPF uses the same test where ownership is not established. That is why proof of who contributed the funds is no detail: without it, the agency relies on the formal holding of the account and allocates according to its databases, not according to how the family actually arranged its money.

Six months to review, one month to appeal, and evidence you should not hold back

This almost always arrives as a limited review by a management office. Article 136.3 LGT forbids it from requiring third parties to provide information on financial movements, although it may ask you for documentary justification of transactions affecting the tax. If the agency needs to investigate your accounts at the bank, it has to open an inspection, where article 93.3 LGT requires prior authorisation for such individual requests.

Article 104 LGT allows six months from notification of the commencement to notify the decision, and an attempted notification containing its full text is enough. Once that period expires the review lapses, and paragraph 5 adds the decisive point: actions taken in a lapsed procedure do not interrupt the limitation period, although the evidence gathered keeps its value. If the year is about to become time-barred, a carefully measured lapse can close the case. Before assessing, you are sent a proposal with ten to fifteen days to respond (article 99.8 LGT).

Against the assessment you may lodge the reposición appeal or the claim before the TEAR within one month, under articles 223.1 and 235.1 LGT, and then the court claim before the Tribunal Superior de Justicia within two months. The Tribunal Supremo allows evidence not produced during the review to be submitted at the appeal stage, unless the conduct was abusive or malicious, but holding it back is an unnecessary risk. The penalty comes in a separate file and is challenged on its own: the presumption that serves to assess the tax does not relieve the authority of giving reasons on fault.

How we run the case, step by step

1. 1

   Reading what has arrived and noting the date

   We identify whether it is a request for information, the start of a limited review or an inspection, and which year and deposits it covers. The notification date starts the six months of article 104 LGT and shows how far that year is from becoming time-barred.

2. 2

   Rebuilding the origin deposit by deposit

   We draw up a list of every deposit with its date, amount, origin and the document proving it. Before arguing anything we check the tax consequence of each explanation: a gift, a loan, a sale or savings predating the limitation period do not cost the same.

3. 3

   Answering the request with evidence, not with stories

   We provide what was asked, in time, no more and no less, and under article 105.2 LGT we identify the data the agency already holds: cash withdrawals reported by banks, declared sales, inheritances filed. Whatever is not provided now has to be defended later at a disadvantage.

4. 4

   Submissions against the proposed assessment

   Against the proposal there are ten to fifteen days under article 99.8 LGT. We dispute the underlying fact, the year of attribution, the split between joint holders or spouses and the limitation period, and we put all the evidence on record. The penalty has its own file and its own submissions.

5. 5

   Reposición appeal or TEAR claim within one month

   Once the provisional assessment is notified, it is challenged within the month set by articles 223.1 or 235.1 LGT. To stop collection while the dispute runs, the amount is paid or suspension is requested with security; a penalty challenged in time is suspended without it.

6. 6

   Court claim before the Tribunal Superior de Justicia

   If the TEAR rejects the claim, article 46.1 LJCA gives two months to go to the Sala de lo Contencioso-Administrativo of the Tribunal Superior de Justicia, which has jurisdiction under article 10.1.d) LJCA. There the person who handed over the money gives evidence as a witness, any expert evidence needed is produced, and interim relief is requested.

The law that applies

• Art. 39 LIRPF. Treats as unexplained capital gains any assets or rights whose holding, declaration or acquisition does not match the income or assets declared, as well as non-existent debts included in returns, and adds them to the general taxable base of the period in which they are discovered, unless the taxpayer sufficiently proves ownership since a date before the limitation period. BOE-A-2006-20764
• Art. 11 LIRPF. Governs the attribution of income between taxpayers: where ownership is not established, it allows whoever appears in a tax or other public register to be treated as owner, and it attributes unexplained capital gains according to ownership of the assets or rights in which they appear. BOE-A-2006-20764
• Art. 105 LGT. Places on whoever asserts a right the burden of proving the facts on which it rests, and treats that duty as fulfilled where the taxpayer specifically identifies evidence already held by the tax authority. BOE-A-2003-23186
• Art. 66 LGT. Sets at four years the limitation period for the authority's right to determine the tax debt by assessment, for its right to demand payment of assessed and self-assessed debts, and for the rights to request and obtain refunds. BOE-A-2003-23186
• Art. 104 LGT. Limits to six months, unless a statute provides otherwise, the period for notifying the decision, counted in procedures started by the authority from notification of the opening decision; treats an attempted notification of the full text as sufficient; and provides that actions in a lapsed procedure do not interrupt the limitation period, although the evidence keeps its value in other procedures. BOE-A-2003-23186
• Art. 136 LGT. Confines the limited review to examining returns, data held by the authority, official records and documents, and requests to third parties, and expressly forbids requiring third parties to provide information on financial movements, while allowing the taxpayer to be asked for documentary justification of financial transactions affecting the tax. BOE-A-2003-23186
• Art. 235 LGT. Sets one month from the day after notification of the act to lodge the economic-administrative claim, by a document addressed to the office that issued it, which may simply ask for the claim to be registered and must be lodged at its electronic office where the claimant is obliged to deal with the authorities electronically. BOE-A-2003-23186
• Art. 1227 CC. Provides that the date of a private document does not count against third parties except from its entry or registration in a public register, from the death of any of the signatories, or from its delivery to a public official acting in that capacity. BOE-A-1889-4763

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

Frequently asked questions