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Tax fraud in Spain: figures, data and prevention measures

The fiscal fraud refers to all illicit conduct in which people or companies, considered taxpayers, willfully or negligently incur, and that takes place when they hide or omit income and assets to the tax administrations. It can also occur when the taxpayer overvalues ​​deductible items, with the sole purpose of reducing the payment of taxes with respect to what would legally correspond to them.

It must be taken into account that, in Spain, the tax offense takes place when the fee defrauded exceeds 120,000 euros within a one-year period, on periodic reporting taxes, such as income tax or VAT.

The truth is that tax evasion is a serious problem worldwide. According to the study carried out by Tax Justice Network, which El País collects, states stop entering 360,000 million euros per year, with the consequent constant decline in national public coffers. In the specific case of Spain, are data from the end of 2020, the hole approaches the 3.7 billion euros, equivalent to 1.52% of total tax revenue and 5% of health spending.

The figures detected by the Tax Agency are lower. In 2020, 313.4 million euros evaded were recorded, while in 2019 they were approximately 430.7 million, which represents a decrease of 37%, in part due to non-face-to-face inspections, which have reduced the ability to investigate.

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For its part, the union of technicians of the Ministry of Finance, Gestha, estimated at 91.6 billion euros the annual losses to the public coffers due to a tax fraud that urges to combat by creating a higher technical body of the Treasury and increasing the staff of the Tax Agency (AEAT) with between 15,000 and 17,500 personnel. According to Gestha, tax fraud causes annual losses of 60,600 million for evaded taxes and another 31,000 million for contributions defrauded to Social Security, so that in Spain they are evaded every year “Some 31,800 million euros above the European submerged average”.

Law to fight against tax fraud

Last June, Congress definitively approved the draft prevention measures law and fight against tax fraud, after having successfully completed its parliamentary process. The rule, which had seen the green light from the Council of Ministers on October 13, 2020, allows the adaptation of tools to combat new forms of fraudulent behavior associated with new technologies, in line with the policies developed by other neighboring countries. It also strengthens the instruments to prosecute avoidance carried out by large multinationals through abusive tax planning.

Among the measures included in the bill is the limitation of payment in cash for certain economic operations, that goes from 2,500 to 1,000 euros, in the case of operations in which an entrepreneur or professional intervenes. In turn, the cash payment limit is lowered from 15,000 to 10,000 euros in the case of individuals with tax domiciles outside of Spain.

Likewise, the new norm contemplates the prohibition by law of tax amnesties, avoiding that there are comparative grievances with the majority of taxpayers, who comply with their tax obligations.

With this law, the threshold of the debt with the Treasury that entails appearing on the list of debtors is lowered from one million euros to 600,000 euros. In addition, those jointly and severally liable are included in that list of debtors.

The law updates and expands the concept of tax havens, which are now called ‘non-cooperative jurisdictions’, a term used internationally. The list of tax havens must be updated periodically.

In addition, the new regulations are in tune with the objective of combating new fraud formulas associated with new technologies. The law establishes the prohibition of the production, possession or commercialization of the so-called ‘dual-use software’, where computer programs are used that allow manipulation of the accounting and that can be used by infringing companies to hide part of their activity.

Basque Country

In the specific case of the Basque Country, the latest study prepared by the regional government, “Submerged Economy and Tax Fraud in Euskadi”, published in 2016, established that the submerged economy exceeded 17% of GDP in the region. With an annual revenue reduction in the Basque public coffers between the years 1990-2014, of 2,320 million, practically 25% of the regional budget. This is one of the reasons why the Basque administration has established systems such as TicketBAI, which is still in a non-mandatory period, but which will be a key tool to fight this scourge.

More recently, the deputation of Biscay a total of 504,082,118 euros in the 487,174 actions against tax fraud that were carried out. Almost three out of every four regularized euros corresponds to Value Added Tax. However, the coronavirus made a dent, since in 2020 37% less was regularized due to the pandemic.

For its part, the Treasury of Guipúzcoa recently made public the list of defaulters, which includes 45 people who have a total debt of 264 million euros. Finally, in Álava, with data from 2018, tax fraud reached a total of 132 million euros.

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