Spanish Revenue to go after the 'submerged economy'

SPAIN (Agencies) Spains's Agencia Tributaria (Revenue Agency) is to begin a campaign this year aimed fighting against what is called the 'submerged economy' ( the 'under-the-counter' variety in English) that will be closing in on those who are getting benefits, such as unemployment, but are working and getting paid, among other things. This according to the Plan de Control Tributario 2011, published in the Boletín Oficial del Estado (BOE, the Official State Bulletin). The plan also sets out increasing surprise visits by tax inspectors to offices and shops in order to detect the 'submerged economy', which will be done with the cooperation of the Department of Labour, Social Security and the Treasury. Thus, according to agency reports, inspectors will appear at>establishments in selected areas, associated with certain sectors. Also, Revenue will make use of new facilities involved in the use of credit cards and bank statements, as well as electricity consumption that show undeclared industrial usage. 

 

Control is also planned against 'false self-employment' as well as against 'activities derived from goods proceeding from Asia and other third countries'.

 

False IVA bills

Control is planned, too, of professional activities through 'external signs of wealth' that can signify undeclared income. False IVA (VAT) bills and false subcontractors will be detected, as well as transactions in high denomination bills.

There is also room for detecting transactions that do not pay IVA when they should, particularly in the service industry. The Plan will take action against accounting firm, gestorías and other such centres, including internal company departments, that offer fraudulent financial planning or accreditation of doubtful financial costs aimed at reducing or eliminating taxable income. (Note: Scam merchants, in other words.)

 

Fictitious bankruptcies

One of the country's financial banes is the 'fictitious bankruptcy' whereby  a company or a person simply declares bankruptcy having previously transferred all assets to another company or person. The result is that genuine creditors - including the tax authorities - do not get paid, while the person behind the company continues to live beyond his or her apparent means, and is free of tax debt as well. This, too, is part of the Plan de Control de 2011.

As for fiscal fraud (a.k.a. tax evasion), failure to pay tax regularly could imply that procedures for embargo ensue. Personal visits by a team of tax inspectors are likely at places that make the more complex tax declarations.

Data base

The Plan has a section dealing with 'improvements in cooperation and exchange of information' between the state revenue service and that of the autonomous regions'. Specifically, a 'shared census' (political double-speak for sharing data) reulting in coordinated operations against 'significant real estate deals'.

(Prospero Note: All of this seems a little late, given the state of the national economy, particularly the very last item about 'significant real estate deals'. Where were the Revenue inspectors during the heyday of the gigantic land deals all over the country that resulted in the ruination of so many beautiful places and the vast profits made by developers who disappeard, leaving unfinished buildings and smoldering purchasers without legal recourse? And in any case, what have the inspectors been doing all along? - all the items described above are and have been illegal for a very long time!)