Strengthening the fight against the hidden economy and the investigation of wealth and incomes that may be hidden overseas will be the basic pillars of the 2016 Tax Control Plan, the guidelines of which will be published on Tuesday in the Official State Gazette.
Other fundamental aspects of the plan include steps to control international fiscal planning and e-commerce, fields in which the Spanish Tax Agency will be supported by strengthened taxpayer selection and control tools. Similarly, the fight against fraud in the area of tax collection will also be stepped up under a strategy focused on extending actions to manage the collection of outstanding debts to a larger number of taxpayers by detecting cases of liability and guaranteeing effective debt collection.
In 2016, the Spanish Tax Agency will maintain its coordinated strategy against the hidden economy by increasing the number of visits by personnel from the IT auditing departments (UAI) at workplaces where economic activity takes place. Last year, tax revenue uncovered by UAI action amounted to 289 million euros, an increase of 51% on the previous year and 8.5 times the amount for 2012.
Specifically, coordinated selective actions will be strengthened at a national level to detect hidden activity using so-called "concealment software" or "double-use software", especially at companies based heavily on the use of cash for both making sales to the end consumer or forming part of the distribution chain to other retail companies.
Similarly, on-site actions aimed at invoicing and payment method analysis will be conducted to verify the effectiveness of compliance with limiting payments in cash, as provided for under the Anti-Fraud Act of 2012. Actions will also continue with private individuals that transfer properties in an opaque fashion over the Internet or by other methods, as well as with regular tourism companies that fail to duly meet their tax obligations. Actions will also be taken in the field of the importation of goods.
Strengthened investigation of wealth kept overseas
The 2016 Control Plan contains a specific section focused on the control of wealth and incomes that may be hidden overseas. The information in this regard provided in Form 720 on the Declaration of Overseas Assets and Rights will continue to play a fundamental role in the search for offshore wealth. However, as from this year, additional information will also start to be received by the Spanish Tax Agency via the US FATCA initiative on foreign accounts (which is already in place) and subsequently from third countries (CRS agreement on the exchange of financial account information signed by Spain and 78 tax jurisdictions, and work groups within the European Union for the automatic exchange of information - AEOI).
In anticipation of this relevant information for control purposes that will soon be available, the Spanish Tax Agency has created new IT tools that will enable a restructuring and improved treatment and use of the financial account information, currency exchange movements and transactions related to non-residents.
Within this context, one of the especially significant actions will be the use of the information received spontaneously from other Member States of the European Union regarding taxpayers with residence in Spain, for the completion of checks on the global income of taxable persons.
At the same time, inspections relating to Form 720 will remain open - both regarding failure to present or indications of asset concealment and a lack of consistency between the assets and rights included in the tax return and the rest of the available information on their tax or wealth situation.
In the field of international taxation, traditional and basic lines of action will be maintained. These include the use of 'hybrid' instruments (with different tax treatment in Spain and in a third country), the detection of permanent establishments and the analysis of transfer pricing.
Particular importance will also be given to the information provided by companies within the framework of the Code of Best Tax Practices regarding such issues as their degree of presence in tax havens or the level of congruency in their tax decisions with the principles of the OECD BEPS package (Base Erosion and Profit Shifting).
As regards this and other topics contained in the Conclusions on the Development and Monitoring of Application of the Code of Best Practices approved at the Plenary Session of the Large Companies Forum in November last, once this information has been received from companies, the Inspections Department of the Spanish Tax Agency will undertake action with immediate effect to verify and analyse the same in order to conduct the control activities deemed appropriate.
As regards the digital economy, action protocols will be implemented at both companies that conduct e-commerce and those that store their data in the cloud. Checks will also be carried out on the taxation of businesses that operate online, as well as the profits obtained by companies that publish goods and services on the Internet.
Among other things, an analysis of specific risks incurred by e-commerce operators will be established and additional information will be obtained on their positioning in the sector as regards factors such as the level of connection between companies or their position as intermediaries. Information on operators considered a risk will be systematised, such as the names of their domains and the indicators on their status as an advertiser.
Furthermore, other situations will continue to be the subject of special control, such as the improper use of companies to channel incomes and reduce the taxation of individuals, professional activities, external signs of wealth for the purpose of detecting undeclared revenue, the issue of irregular invoices and cases of organised VAT fraud. Similarly, increased control will be applied to incomes declared exempt that represent fiscally deductible expenses to taxpayers.
In the field of tax collection, efforts to manage outstanding tax debt payment will be extended to a larger number of taxpayers, promoting the derivation of liability and, as appropriate, the legal actions necessary to combat processes to strip out assets of significant value and assumed cases of insolvency offences.
Furthermore, tax collection management will be sped up in cases indicating signs of tax offences and smuggling in accordance with the possibilities offered by the reform of the General Tax Act, and interim measures will be strengthened to guarantee the collection of debts, the investigation of financial movements and management of both debts in the seizure stage and those affected by bankruptcy proceedings, while also boosting the viability of companies.
As regards the issue of controlling Customs and Special Taxes, particular importance will continue to be given to actions aimed at detecting tobacco smuggling, highlighting the suppression of new production and introduction techniques in Spain, controls will be strengthened at customs sites for travellers and goods coming from areas with lower taxation, and tools will be developed to facilitate the investigation of large criminal organisations in terms of money laundering.
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