09 Nov New draft law for the prevention and actions against tax fraud in Spain.
A new draft law has been approved in order to update the current prevention measures and actions against tax fraud in Spain. This draft law provides for both the tightening of current measures and the creation of new measures associated mainly with new technologies.
On 13rd October the Council of Ministers approved the draft law on prevention measures and actions against tax fraud in Spain, which is now moving to the next stage of Parliament proceedings. This draft law includes various measures in order to act against various tax evasion practices that have occurred in recent years.
The most important measures to be implemented are:
1.- Crypto-currency
A number of specific reporting obligations on crypto-currency are established, in order to have a better control over them. This incorporates the obligation to provide information on holding and acquisition, transmission, exchange, transfer, collection and payment operations with crypto-currency currencies.
Likewise, the draft law introduces the obligation to report on the possession of virtual currencies out of Spain in tax form 720 regarding the declaration of goods and rights in foreign countries, an obligation which may be controversial in its application.
2.- Additional limitation of cash payments
A new limit is set on cash payments between business actors from €2,500 to €1,000. This limitation does not affect payments made by private individuals. However, in the area of cash payments by private individuals with tax domicile outside Spain, the cash payment limit is reduced from €15,000 to €10,000.
3.- Prohibition of tax amnesties
The prohibition of tax amnesties is established, i.e. any extraordinary tax adjustment mechanism involving the reduction of the amount of the tax debt is prohibited by law.
4.- Expansion of the debtors list at the Spanish Tax Authorities
The amount, once exceeded will lead to be included in the debtors list of the Spanish Tax Authority¡ies, is reduced from €1 million to €600,000. Likewise, those jointly and severally liable are expressly included in this list, together with the main debtors.
5.- Tax havens
Now the concept of non-cooperative jurisdictions is adopted, a term that has been used internationally instead of the traditional concept of tax haven.
This concept is also extended to include those territories
(i) that are facilitating the existence of offshore companies to attract profits with no real economic activity,
(ii) where there is opacity and lack of transparency or territories without an effective exchange of information regarding the ultimate beneficial owner of the goods or rights,
(iii) where there is low or no taxation at all (until now, only the concept of zero taxation was included),
(iv) with preferential tax regimes which are intentionally giving non-residents a favorable treatment over tax residents.
6.- Dual-use software
In recent years, the Spanish Tax Authorities has paid special attention to act against the use of this type of software, so that the present draft law prohibits the so-called dual-use software, which consists of computer programs that allow accounting to be manipulated. This prohibition is not limited to its mere use, but extends to the production or possession of such computer programs and systems that allow the manipulation of accounting and management data.
The proposed legislation provides for the regulatory inclusion of technical specifications, such as making it subject to certification and ensuring that the integrity, conservation, traceability and unchangeability of operation records are guaranteed. To this end, a specific penalty regime is established for the production of these programs or their possession without an adequate certification.
7.- Reference value in Transfer and Stamp Duty Tax, Wealth Tax and Inheritance and Gift Tax
One of the main reasons for litigation in the area of Transfer and Stamp Duty, Wealth Tax and Inheritance and Gift Tax is the valuation of the assets and rights affected by these taxes, insofar as the concept of real value sometimes used gives rise to situations of clear legal uncertainty both for the taxpayer and for the public administrations concerned.
In the case of real estate, the value used will be the so-called reference value established by the Spanish Cadastre, which must do so on the basis of all the real estate purchases and sales actually made and formalized before a public notary.
It must be taken into account that the reference value is different from the general cadastral value and for this reason, this regulation does not affect in any way the taxes that use the cadastral value as a taxable base, such as the Personal Income Tax, the Local Property Tax or the Tax on the Increase in Value of Urban Land.
8.- Anti-tax evasion measures
This draft law also provides for the transposition of the European anti-tax avoidance directive, known as ATAD, which lays down rules against tax avoidance practices, which have a direct impact on the internal market. The directive incorporates several of the matters dealt with in the OECD reports of the Action Plan to prevent the erosion of the tax base and the transfer of profits (BEPS Plan).
In this context, the Spanish legislation incorporates measures concerning International Tax Transparency and Exit Tax.
9.- Voluntary compliance with obligations
In addition, and in order to encourage voluntary payment and reduce litigation, the draft law contains changes to the system of reductions applicable to tax penalties and to the system of surcharges.
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