Over 55% of rentals are undeclared, according to tax authorities

SPAIN (Agencies) More than one million property rentals, or 55.4% of the total, are not declared on tax forms, says the Agencia Tributaria, the Spanish tax authority. A report carried out in conjunction with the Minisry of Housingb, reveals that two thirds of the undeclared rentals are concentrated in Cataluña, Andalucía and Madrid. The study says that a minimum of €3 billion is being defrauded throughout the country. A spokesperson for civil servants involved in detecting such fraud says that>
the reason behind a considerable increase in undeclared rentals could be that many owners have decided not to mention their rental income on their June 2009 income tax forms because the economy was entering a 'delicate phase'. He also points out that approval of an anti-fiscal fraud law is delayed in Parliament by two years and it should take another two for it to come into effect.

On the other hand, many new rentals have been registered as the result of a tax break amounting to 100% of rental-derived income that came into effect in 2008.

The spokesperson commented, "How can we be expected to catch tax evasion from high-level fraudsters, via shell companies and off-shore stashing, when we can't catch this kind of evasion, which is relatively simple?"

Nevertheless, the tax authorities are planning a major drive against rental-derived income during this fiscal year.

Spanish law requires all foreign residents, and non-resident property owners, to file an income tax form every June. All rental income must be reported. We suggest you contact your tax preparer for more information.

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