Lucha contra fraude fiscal


The fight against fraud: a new wave of litigation?

Author: Belén Fernández. Partner of Bové Montero y Asociados


The new regulation against tax avoidance suggests that the mere fact of having a large estate represents an intent to avoid taxation


The recent Act on Measures to Prevent and Combat Tax Fraud is an ambitious, far-reaching and complex project. After all, it covers practically the entire tax spectrum and reforms the  foundational text of the Spanish tax system, the General Taxation Act. It has two main goals:  firstly, to incorporate EU legal measures to combat tax avoidance into the Spanish legal system, and, secondly, to introduce regulatory changes aimed at establishing tax-law parameters that will facilitate actions designed to prevent and combat fraud, with a greater level of tax control.

In its explanatory statement, the regulatory text suggests that taxpayers with large estates – and their social and family circles should be monitored particularly closely, and a central coordination unit has been set up for the purpose. The explanatory statement should not be taken lightly, as it may lead one to understand that a large estate brings with it an intention to, or at least an attempt to, avoid paying taxes (and not only with regard to the holders of these vast fortunes and their families, but also to their social circles). That’s just for starters.

In light of EU Directive 2016/1164, amendments are made to Corporate Income Tax in the area of “international tax transparency”. Namely, there are new arrangements for income allocation and exit tax on annual value, now included in the tax base, and also for assets transferred to EU member states or those within the European Economic Area, although there is an option to spread payment over five years.

Regarding Personal Income Tax, one of the changes affects legacies following a bereavement, where there is a will or testament with effects.  The idea is to avoid the discounting of values or setting of acquisition dates that would result in lower taxation than if the asset had been transferred directly to a third party by the original owner. The tax base is also modified for property transfer tax, stamp duty, and inheritance tax, with real value replaced by value, the latter being understood as market value.

Wealth tax sees additions regarding the procedure for valuations of life insurance when the policy holder does not possess the faculties to exercise his/her right to early payout, which prevents tax avoidance on life savings insurance with clear asset value. In addition, there is a new valuation rule for life insurance policies that pay out fixed-period or lifetime annuities.

To prevent the production and possession of computer systems and software that allow accounting and management data to be tampered with, the project sets out a formal obligation to maintain records, establishes certification and standardisation requirements, and creates a specific penalty system.

Regarding the general penalty system, changes are made to the surcharges for late filing, including cases where the return was filed before an enquiry was issued by the Tax Agency. The new system consists of incremental surcharges of 1% for each full month after the deadline, with no interest for late payment until 12 months have elapsed. From the day following this end of this period, in addition to a surcharge of 15%, late payment interest will begin to accrue. Essentially, the surcharge rates are reduced in order to encourage voluntary payments. Additionally, in specific circumstances, surcharges are waived for taxpayers that perform tax adjustments that were previously made by the Tax Agency (AEAT) for the same tax and circumstances, but in a different tax period.

There are also various changes to the system of reductions on tax penalties, intended to ease their application, encourage voluntary payments, and, according to the new regulation, reduce litigation. Whatever the case may be, it is incomprehensible that the new regulations support the authorities as they continue to present the taxpayer with the dilemma of whether to refrain entering into a dispute with the AEAT in return for more favourable treatment in terms of possible penalties, or even whether to accept the proposed adjustments from a tax inspection on the condition that no penalty procedures will be initiated.

Anyway, the reduction of penalties arising from inspection reports with agreement rises to 65%, while for early payment the reduction is now 40%. The reduction for conformity remains at 30%. It is also provided that the maximum period in which penalty proceedings can be initiated following settlements or decisions given in certain procedures is increased to six months, compared to the current three.

Taking the view that the use of cash payments in transactions can facilitate fraudulent behaviour, the cash limit is reduced from 2.500 to 1.000 euro. It remains at 2.500 euro for payments made by natural persons not acting as business persons or professionals, while for non-resident natural persons it drops from 15.000 to 10.000 euro.

Meanwhile, although any exceptional tax adjustment instrument that results in a reduced tax liability is expressly prohibited  (goodbye to tax amnesties), the publication of the list of the tax administration’s debtors (and joint and several guarantors!) will continue for amounts over 600.000 euro (previously 1 million euro).

In short, we are dealing with a regulation that will have significant practical repercussions. To cite just one example, the new concept of the tax value of property will undoubtedly generate a huge amount of litigation in an administrative and legal review system which is already overwhelmed.


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