Tax Fraud Bill

Cash payments over €1,000, software that allows the manipulation of accounting data and tax amnesties are prohibited, new reporting obligations for cryptocurrencies are established and the laws of the main taxes are amended: IRPF, Corporations, VAT, ITPAJD, ISD, Non-residents, Wealth, Local Treasuries.

The new draft Law on measures to prevent and combat tax fraud, transposing Council Directive (EU) 2016/1164 of 12 July 2016, laying down rules against tax avoidance practices that directly affect the functioning of the internal market, amending various tax rules and on the regulation of gambling, has started the parliamentary processing with its publication in the Official Gazette of the Congress of Deputies of October 23, after the Council of Ministers held on the 13th of the same month, was definitively approved a text that has been maturing in preliminary draft phase for about 2 years.

Most of the tax laws will be affected

In order to make the measures effective, the future law, if finally approved, will modify specific articles of practically all tax laws: Personal Income Tax, Corporate Income Tax, VAT, ITPAJD, Inheritance and Donations, Non-residents, Wealth, Local Taxes, in addition, of course, to the General Tax Law and other provisions such as the Cadastre Law or the Law on Contentious-Administrative Jurisdiction.

Corporate income tax

With respect to corporate income tax, the special rules governing changes of residence and transactions carried out with or by persons or entities resident in tax havens and the amounts subject to withholding are modified, and changes are introduced in the allocation of positive income obtained by non-resident entities and permanent establishments in the international tax transparency regime.

SOCIMIS

The Government has announced that it intends to include measures to reinforce the control of SICAVs during the processing of this Law. These measures are not contemplated in the first draft published in the Spanish Parliament:

The Tax Agency’s Inspectorate will be given the authority to verify that these instruments comply with the requirements to become collective investment vehicles and not a tax planning tool for large family estates.

In addition, SOCIMIS will be taxed at a rate of 15% of their profits not distributed as dividends to their shareholders.

Personal income tax

Within the scope of Personal Income Tax, the acquirer of an asset through a contract or inheritance agreement is prevented from being subrogated to the value and date of acquisition of the asset by the deceased, provided that the asset is transferred before the death of the latter, thus preventing the updating of the values and dates of acquisition of the acquired item, which would result in lower taxation than if the asset had been transferred directly to a third party by the original owner.

Likewise, an obligation to provide information on the balances held by holders of virtual currencies is introduced for those who provide services on behalf of third parties to safeguard private cryptographic keys that enable the holding and use of such currencies, and the requirements to be met in order for the special rule of temporary imputation not to apply to life insurance policies in which the policyholder assumes the investment risk are adapted. The treatment of investments in certain collective investment institutions, known as listed investment funds and companies, is also homogenized, regardless of the national or foreign market in which they are listed.

Transfer Tax and Stamp Tax and Inheritance and Gift Tax

Both in the Transfer Tax and Stamp Duty and in the Inheritance and Gift Tax, the market value of the property or right to be transferred or acquired is considered as the taxable base. In addition, for the sake of legal certainty, in the case of real estate, the taxable base is the reference value established in the revised text of the Real Estate Cadastre Law.

In the first, in addition, the taxable event is delimited in relation to transactions involving purchases from individuals of gold and jewelry items by traders in this business sector, and in the second, the regulation of the accumulation of donations is modified to include the cases of contracts and inheritance agreements that produce acquisitions during the lifetime of the deceased, in addition to extending its scope to all non-residents, whether residents in a Member State of the European Union or the European Economic Area or in a third State.

Wealth Tax

In the Wealth Tax, the same valuation rule is also applied for real estate whose value has been determined by the Administration in a proceeding, in addition to establishing the basis of how life insurance policies are to be valued when the policyholder does not have the right to exercise the right of surrender, thus avoiding the possibility of avoiding taxation on life-savings insurance policies whose equity content is unquestionable, establishing a new valuation rule for those cases in which temporary or life annuities are received from a life insurance policy.

In line with the foregoing, the revised text of the Securities Market Law is also amended in order to eliminate the references to the real value in the valuation of real estate, and replace it, in particular for the purposes of the Transfer Tax and Stamp Duty, by the reference value.

Value Added Tax

As regards Value Added Tax, the case of subsidiary liability for the payment of the tax, currently defined for customs agents, is updated and now applies to persons or entities acting in the name and on behalf of the importer. Likewise, the scope and nature of the breaches of the specific obligations of the regime of the group of entities in which the parent entity must necessarily be the offending party are clarified.

On the other hand, the assumption of subsidiary liability for payment of the tax debt that reaches the holders of warehouses other than customs warehouses corresponding to the exit or abandonment of goods from these warehouses is extended to goods subject to Special Taxes that were excluded until now, in order to prevent the benefits of the regime from being used fraudulently to make purchases exempt from Value Added Tax under the regime, with accrual of the Tax on exit but without payment of the same to the Tax Authorities.

Canary Islands General Indirect Tax

As regards the Canary Islands General Indirect Tax, the amendments included in the Value Added Tax regarding tax liability in the area of customs settlements are incorporated, and the delay or failure to keep the IGIC record books through the electronic office of the Canary Islands Tax Agency by providing the invoicing records is typified as a tax infringement.

Manufacturing excise taxes

In the field of manufacturing excise taxes, a technical adjustment is made to the definition of tax warehouses and the existence of differences in less products subject to manufacturing excise taxes, which exceed the percentages established in the regulations, is typified as a serious infringement. Likewise, a serious infringement is included for cases in which the use or destination given to the products for which an exemption or a reduced tax rate has been applied is not justified, and a minor infringement in case the products have been used for a purpose that justifies the exemption or the application of the reduced tax rate.

Tax on Economic Activities

With respect to the Business Tax, in order to reinforce the anti-avoidance measures provided for in the regulation and to avoid that the rule of accumulation of the net amounts of the turnover corresponding to the members of a commercial group, which determines the taxation in the tax, may not be applied, the normative references for the consideration of a group of companies are updated and it is clarified that the rule for the calculation of the net amount of the turnover must be applied independently of the obligation of accounting consolidation. In order to avoid discrepancies with Community Law, it is established that the tax exemption for individuals applies to both residents and non-residents.

Cadastral information

In cadastral matters, the cases of incorporation of new constructions and alterations by means of communication from Local Administrations and entities managing the Real Estate Tax are extended without the need for them to be obliged by tax ordinance, with regard to acts subject to license or administrative authorization. Likewise, an additional regime of communications is enabled by virtue of which the information provided by duty of collaboration is covered by the exemption from the obligation to declare, provided that all the documentation accrediting the corresponding alteration is available.

On the other hand, the effects of the correction procedure are transferred to the moment in which the Tax Administration is aware of the discrepancy between the cadastral description and reality, facilitating the adjustment to the evolution of the real estate reality, and the regulation of the reference value of the General Directorate of Cadastre is adapted, in order to provide it with greater rigor, precision and legal certainty in its determination.

Gaming taxes

With respect to the taxation of gambling, measures are established to enable adequate mechanisms for collaboration in the prevention and fight against the manipulation of sports competitions and to combat fraud that may occur in sports betting.

The list of entities to which the gaming regulatory authority may request information is also extended, requiring gaming operators to collaborate in the fight against fraud by preparing a specific manual including specific procedures and measures, while new types of offenses are introduced and some of the existing ones are modified in order to sanction fraudulent practices of the participants in the games, of the operators themselves or of suppliers or intermediaries, or violations.

General Tax Law

It is in the area of the General Tax Law that the most numerous changes have taken place.

Prohibition of tax amnesties

In the first place, the prohibition of the establishment of any extraordinary tax regularization mechanism that implies a decrease in the amount of the tax debt is incorporated.

Concept of tax debt

On the other hand, the term “tax debt” is now considered to include all items, such as interest for late payment or surcharges.

Interest on late payment and late payment surcharges

The system for accrual of interest on late payment in the case of obtaining an unjustified refund is clarified. In this sense, the accrual of interest will be fully compatible, if applicable, with the late payment surcharges in accordance with the general rules governing such surcharges. Likewise, the system of late payment surcharges is modified, establishing a system of increasing surcharges of 1% for each full month of delay without interest for late payment until the twelve-month period of delay has elapsed. From the day following the expiration of the aforementioned twelve months, in addition to the accrual of the 15% surcharge, interest for late payment will begin to accrue, except for those who regularize a tax conduct that has been previously regularized by the Tax Administration for the same tax concept and circumstances, but for other periods, not having been subject to a penalty, provided that it is regularized within a period of six months from the notification of the liquidation.

The regulation of late payment interest is adapted to expressly recognize that it will not be accrued in refunds derived from the regulations of each tax and undue income during certain periods.

Prohibition of software that allows the manipulation of accounting data

In order to prevent the production and possession of computer programs and systems that allow the manipulation of accounting and management data, the obligation is established that the computer or electronic systems that support the accounting or business management processes must comply with certain requirements that guarantee the integrity, conservation, accessibility, readability, traceability and unalterability of the records, legibility, traceability and unalterability of the records, requirements whose technical specification may be subject to regulatory development, including the possibility of submitting them to certification, and a specific sanctioning regime is established, derived from the mere production of these systems or programs, or the possession of the same without the appropriate certification.

Non-resident representatives

The representation regime for non-residents is adapted to bring it in line with European Union Law.

Precautionary measures

In order to prevent fraudulent use of suspension proceedings with other guarantees, or with a waiver thereof, the possibility of adopting precautionary measures during the processing of such proceedings has been incorporated.

List of tax debtors

Changes are introduced in the list of tax debtors, reducing to 600. 600,000 euros the amount whose exceeding entails the inclusion in said list, and it is expressly included in the list of debtors to the Public Treasury, together with the main debtors, those jointly and severally liable, clarifying that the period in which the tax debts and penalties must be paid in order not to be considered for the purposes of the inclusion in the list of debtors is the regulatory period for payment in the voluntary period determined by the regulation, without said original voluntary period being extended, for example, by requests for deferral or fractionation presented in said original voluntary period; For these purposes, the original voluntary period of payment of the debt is understood to be the initial voluntary period of payment, regardless of the actions that the principal debtor may have taken or the vicissitudes that the tax debt may have undergone.

Continuing with the novelties regarding the publicity of debtors, the debtor included, in principle, in the list of tax debtors as of December 31, will be allowed to be excluded from said list as long as the debts and tax penalties that would have determined its inclusion have been collected in full.

Imports of goods

The causes for termination of the management procedure initiated by means of a declaration are modified with respect to taxes paid on imports of goods, in order to bring it into line with the provisions of the customs legislation for import duties, establishing that a declaration of forfeiture will not be applicable in such procedures, and that such procedures may be terminated when it is subsequently agreed to initiate a limited verification or inspection procedure on the same object of the procedure.

Suspension of inspection deadlines

A new case of suspension of the computation of the time period of the tax audits is introduced during the application of certain instruments aimed at facilitating the cooperation and coordination of the State tax administrations with the provincial tax administrations in the exercise of such audits.

Non-conformity reports

In the processing of the minutes of disagreement, the mandatory nature of the report of disagreement is eliminated, since currently the content of said report is already included in its entirety in the minutes and the liquidation.

Reiteration of requests

Another novelty is that, in order to avoid the improper use of the filing of repeated requests for deferment, fractionation, compensation, suspension or payment in kind, the processing period of which suspends, as a precautionary measure, the beginning of the enforcement period, it is provided that the reiteration of requests, when other previous requests have been denied and the corresponding payment has not been made, does not prevent the beginning of the enforcement period. Likewise, since the voluntary payment period is a single period, it is clarified that such period may not be affected by the declaration of bankruptcy.

Joint and several liability

On another matter, it is specified, for the purposes of the procedure for the enforcement of joint and several liability, that the voluntary period for the payment of debts is the original period for payment, without the vicissitudes occurred with respect to the principal debtor, such as suspensions or deferrals, having to be projected on the procedure followed with the person responsible.

Infringers in tax consolidation and group of entities

Likewise, the list of possible offenders is modified in order to provide a homogeneous treatment to the offending parties both in the tax consolidation regime of the Corporate Income Tax and in the special regime of the group of entities in the Value Added Tax.

Penalty regime

As regards the penalty reduction system, several changes have been introduced to simplify the application of penalties, encourage voluntary payment and reduce litigation. On the one hand, the reduction of the penalties derived from the minutes with agreement is raised to 65 percent, and the reduction of penalties in case of prompt payment is raised to 40 percent, while the reduction for conformity is maintained at 30 percent.

The amount of the minimum penalties in the case of failure to file or incomplete, inaccurate or false filing of informative declarations required by customs regulations when the infringing conduct occurs in connection with the entry summary declaration is increased to 600 euros.

It is established that the maximum term for the initiation of the sanctioning procedure initiated on the basis of the assessments or resolutions issued in certain procedures for the application of taxes will be six months, in line with the general term for the resolution of tax procedures.

Suspension with waiver of guarantees

On the other hand, legal coverage is granted to the possibility of rejecting suspension requests with total or partial waiver of guarantees by the Economic-Administrative Courts, when it is deduced from the documentation included in the file that they do not meet the requirements established for the granting of the request. Likewise, in order to avoid fraudulent practices consisting of taking advantage of the existing difficulty in processing certain suspension requests, legal status is granted to the possibility of the Administration to continue with its actions in those cases in which the debt is in the enforcement period.

Virtual currencies abroad

The obligation to report on virtual currencies located abroad is introduced and the period of time for the conservation by financial institutions of documentary evidence, of the declarations that may be required from the persons who hold or control the financial accounts and of the other information used in compliance with the reporting and due diligence obligations is modified, which in no case must be less than five years from the end of the period during which the financial institution is obliged to report the information.

Cash payment limit

The substantive regime of cash payments is also modified, decreasing the general limit of cash payments from 2,500 to 1,000 euros; although in order to minimize the collateral effects of the measure on small domestic economies, the limit of 2,500 euros for payments made by individuals not acting as businessmen and professionals will continue to be maintained, although the cash payment limit is decreased to 10. 10,000 euros in the case of private individuals with tax domicile outside Spain, modifying at the same time the regulation of the sanctioning procedure of the cash payment limitations regime, incorporating the consequences for the case of payment of the sanction at any time after the sanction proposal, but prior to the notification of the final resolution to reduce the conflict with respect to the imposition of such sanctions, with a reduction of 50 percent. Finally, a specific term of six months is established for the duration of the procedure, in view of the possible application of the three-month term generally established for the ordinary administrative procedure.