Minutes of the meeting

MINUTES OF THE PLENARY MEETING OF THE FORUM OF ASSOCIATIONS AND
COLLEGES OF TAX PROFESSIONALS
HELD ON JULY 1, 2015

President of the Forum of Associations and Colleges of Tax Professionals

Director General of the State Agency for Tax Administration

Mr. Santiago Menéndez Menéndez

Members representing the State Tax Administration Agency:

Director of the Tax Management Department

Mr. Rufino de la Rosa Cordon

Director of the Department of Financial and Tax Inspection

Mr. Luis Mª Sánchez González

Director of the Collection Department

Mrs. Soledad Garcia Lopez

Director of the Planning and Institutional Relations Service

Mr. Ángel Rodríguez Rodríguez

Director of Legal Services

Mr. Diego Loma-Osorio Lerena

Director of the Tax Information Technology Department

Mr. Alfonso Castro Martinez

Director of the Department of Aduanas and Excise Duties

Ms. Pilar Jurado Borrego

Special Delegate of Catalonia

Mr. Gonzalo David García de Castro

Members representing Associations and Colleges

Professional Association of Accounting and Tax Experts of Spain

Chairperson

Mr. Carlos Berrocal Rangel

General Council of Colleges of Administrative Managers

Vice President of the Alicante College

Mr. Jose Luis Tonda Martinez

President of the Official College of Galicia

Ms. Pilar Otero Moar

General Council of Official Colleges of Social Graduates of Spain

Member specializing in fiscal and tax matters

Mr. Jose Castaño Semitiel

General Council of the Spanish Bar Association

Vice-Dean of the Balearic Bar Association

Mr. Rafael Gil March

Spanish Federation of Professional Associations of Tax Technicians and Tax Advisors

First Vice President Board of Directors

Mr. Juan Alejandro Méndez Hernández

Office of Administrative Managers and Tax Advisors

Lawyer

Mrs. Raquel Cobos Casero

General Registry of Tax Advisors / Registry of Tax Advisor Economists

Chairperson

Mr. Jesus Sanmartin Mariñas

Technical secretary

Mr. Luis del Amo Carbajo

Spanish Association of Tax Advisors

Deputy Director of the Office of Studies

Mrs. Marta Gonzalez Alvaro

Technical Secretariat of the Forum of Associations and Professional Colleges

Deputy Director General of External Communication – Planning and Institutional Relations Service

Mr. Rafael Serrano Galan

In Madrid, on July 1, 2015, the seventh plenary meeting of the Forum of Associations and Colleges of Tax Professionals was held, attended by the persons mentioned above, and in accordance with the following:

AGENDA

1. Opening by the Director General of the State Tax Administration Agency.

2. Approval of the minutes of the meeting held on February 4, 2015.

3. Intervention by the Director of the Department of Financial and Tax Inspection to address the consequences of failure to submit the declaration of assets abroad on time (Form 720).

4. Speech by the Director of the Tax Management Department to discuss the provisional balance of the IRPF 2014 campaign.

5. Other considerations, requests and questions.

I.- In development of the first point of the agenda , the session was opened by the President of the Forum and General Director of the State Tax Administration Agency, Mr. Santiago Menéndez Menéndez, first of all welcoming the attendees and the new members of the Forum on behalf of the Tax Agency, Mr. Rafael Serrano Galán Deputy General Director of External Communication of the Planning and Institutional Relations Service, who acts as Technical Secretary of this Forum and Mr. Diego Loma-Osorio Lerena, Director of the Legal Service and expresses his gratitude to his predecessors Mr. Eduardo Beut González and Mr. Juan Manuel Herrero de Egaña y Espinosa de los Monteros. The Tax Agency then highlights the importance of the work carried out by social collaborators, who are always expected to be involved and aware of the projects and actions undertaken. He also appreciates the request made by various associations to create within this Forum, a Working Group on the project SII (Immediate Supply of Information) and announces that this Group will be established and possibly meetings can be held in the different Special Delegations of the Agency, with the territorial representatives of the different associations, so that these professionals participate with the Tax Agency in a closer way.

II.- In development of the second point of the agenda , the President of the Forum gives the floor to Mr. Rafael Serrano Galán, as head of the Technical Secretariat of the Forum, who explains the process of preparing the minutes of the previous meeting. There were no comments and the minutes of the meeting of 4 February 2015 were approved and will be published in the space reserved for the Forum on the Tax Agency's website.

III.- In development of the third point of the agenda , the President gives the floor to Mr. Luis María Sánchez González, Director of the Department of Financial and Tax Inspection, who points out that the Director General of the Agency has already commented in the Congress of Deputies that action is really being taken to address the failure to submit the declaration of assets abroad on time (Form 720) and, in fact, this is provided for in the general guidelines of the Annual Tax and Customs Control Plan.

In this regard, it is noted that the tax authorities are basically carrying out two types of actions: On the one hand, those intended for those who have not submitted Form 720 and there are indications that they own assets abroad and, on the other hand, those intended for those taxpayers who have submitted the Form but have not done so on time. He adds that there is a wide range of cases and that it could also happen, for example, that during the course of the verification procedures it is concluded that a taxpayer who submitted the form after the deadline was not really obliged to do so. This means that the verification will not necessarily lead to the imposition of a sanction.

He continued his presentation by recalling that for those who submit their submissions after the deadline there is a formal penalty of a minimum of €1,500, which can be reduced for prompt payment. In relation to the non-compliance with the material obligation, its regulation is contained fundamentally in article 39.2 of the Personal Income Tax Law and its equivalent in the Corporate Tax Law, which basically consists of taxation as unjustified capital gains relating to assets or rights that have not been declared on time, although always respecting the two safeguards included in the second paragraph of the aforementioned article 39.2. That is, if the taxpayer proves that the ownership of the assets or rights corresponds to declared income or income obtained in tax periods for which he or she did not have the status of taxpayer for the Tax, this taxation will not be applied as an unjustified capital gain. Accreditation may occur once a verification procedure has been initiated even if the model was submitted late. As regards declared income, there are no nuances and it is understood that this does not necessarily imply that the declaration of the same has been made on time since it is possible that it was declared at a later time. Furthermore, a consequence of the application of article 39.2 is the loss of the statute of limitations to the extent that the income has not been declared. Therefore, taking into account that taxpayers whose income comes from non-prescribed years can perfectly regularize with the general rules, those taxpayers whose income comes from prescribed years cannot be left in a worse position. Therefore, to the extent that there is a complete regularization of income by the taxpayer or of unjustified capital gains, in accordance with the terms of the aforementioned article 39.2, that is, by imputing it to the oldest non-prescribed tax period in which the rule was in force, that is, the year 2012, and to the extent that this occurs without any administrative intervention, it is understood that there is an untimely regularization without prior request. In this case, the 20% surcharge would be applied and at the same time, if applicable, there would be a formal infringement that would entail the imposition of the corresponding sanction, but always the sanction related to the formal breach, therefore reduced.

He added that sanctions are not applied automatically, but that guilt must be assessed in each specific case. For example, cases of people who may have had some kind of difficulty in knowing that this rule was applicable are being assessed, always going case by case in those cases where it is seen that there is no guilt.

It is concluded by pointing out that regularisations as capital gains are taking place in relation to defaulters who have had a significant volume of money and assets abroad, being residents in Spain, without having been subject to taxation in any case. In other words, these are taxpayers in a situation of concealment that led them to not file their tax return on time and to locate their assets outside of Spain. These are cases in which there are genuine unjustified capital gains, because income has been concealed, the special tax return was not filed at the time and Form 720 was not submitted. In these cases, the situation is one of deliberate concealment of assets and rights abroad. These are the cases that the Agency considers to be of greatest risk and is trying to locate.

The President then opens the floor for the floor.

Mr Rafael Gil March, representative of the General Council of Spanish Lawyers, intervened and asked whether the Agency had considered publishing any information note in relation to this matter.

Mr. Luis María Sánchez González points out that the criteria set out are fairly well understood and accepted by all, and are even being reflected in the media, and can therefore be perfectly conveyed to all members of the associations and colleges represented in this Plenary Session.

The President adds that it is necessary to make it clear that when a taxpayer files the 720 late and files it without prior request from the Administration, he regularizes the consequences that the law itself imposes, and in accordance with article 39.2, he regularizes the unjustified increase in assets. In this case, the submission is late, the corresponding surcharges apply and therefore the 150% penalty is not imposed, without prejudice to the formal penalty for late submission, which is much lower. It also indicates that it is interesting to convey that when the 150% penalty is imposed, it is because we are dealing with a taxpayer who, having the obligation to file the 720, has not filed it or has filed it late without regularizing it under the aforementioned article 39.2 and once the Tax Agency has discovered that he has assets and rights abroad, this taxpayer does not prove in any way that these assets and rights come from declared income. He added that, in this regard, the Agency will accept any reasonable means of proof to prove that the assets and rights actually came from declared income.

The President concludes and some representatives of the Associations and Colleges present make some comments on the possibility of raising queries on the matter to the General Directorate of Taxes and on the fact that some associations have already raised them.

IV.- In development of the fourth point of the agenda , the President gives the floor to Mr. Rufino de la Rosa Cordón, Director of the Tax Management Department, to make the provisional balance of the IRPF 2014 campaign.

The speaker, who used a PowerPoint presentation in his presentation, first indicated that although the data are provisional, they may already be quite reliable. He goes on to point out that the trend since 1993 has been to increase assistance, that is, the services that the Tax Agency provides to taxpayers, whether it be telephone information, assistance in the offices, sending the draft, telephone submission and the RENØ. In this vein, the milestone for the next campaign will be the extension of the “Renta Web”.

As regards this year's campaign, the objectives were to promote online filing, to make certain improvements to the PADRE program so that it is increasingly simpler, and to begin the process of merging the draft with the "Renta Web". This last option has been used this year as a limited pilot test of the assistance that the Agency provides in its offices. On the other hand, the unification of deadlines and calendar has taken place, which has meant a very significant advance in the refund campaign and in the presentation of declarations. In addition, taxpayers have been informed for the first time about the destination of taxes, that is, their distribution in the different expenditure policy items carried out by all public administrations. He added that the VERIFICA procedure will begin in a couple of weeks and will be extended to all groups that may potentially require this procedure.

The President then points out the great progress that this procedure represents, since it allows certain incidents to be resolved. on-line . He stressed the importance of the information provided in this campaign on the destination of taxes, as it will be very useful in raising awareness regarding the obligation we all have to pay taxes.

Regarding the advertising campaign “We contribute to receive”, he points out that it is underway and that due to the electoral calendars, it has had to be concentrated at this time. He reports that the budget will continue to be allocated to general awareness campaigns and that an attempt will be made to improve and expand the civic-tax education programme as far as possible, even extending it to universities. He adds that paying taxes is an act of solidarity, since these amounts are mainly destined for pensions, unemployment benefits, social aid for all those people who have had a really hard time over the years, for free education so that there is true equality of opportunity, and for health care, so that there is public health care for all. All of this will have a lot of impact and, therefore, there will be advertising campaigns in this regard.

Mr. Rufino de la Rosa continues by reporting on the updated data of the income tax campaign and points out that the current one has always maintained an increase compared to the rate of filing of declarations in previous years. In relation to the returns made, a greater advance can also be seen since the PADRE and the draft have been unified. He then announced that around 19,250,000 returns are expected, with a slight increase in those with a result to be entered.

Among the services related to drafts and tax data provided by the Tax Agency, the RENØ service continues to be a success, with more than 15 million RENØ requests having been made to date. As regards the Cl@ve PIN, this year there have been 1,237,000 uses. Regarding the forms of submission of this campaign, there has been a decrease in the submission of drafts of 630,000, although this is largely due to the start of the “Renta Web” pilot test. The group in which the “Renta Web” has begun to be implemented is that of taxpayers with the draft pending confirmation and also some taxpayers from the PADRE group with leases. Around 550,000 of this type have been carried out in Renta Web offices. On the other hand, regarding the forms of submission, it can be said that almost 80% of the declarations have been submitted online and there has been a slight decrease in telephone assistance. The remaining methods, which are PDF or drafts delivered to financial institutions, represent 8% of the submissions. He emphasises that the important thing about all this is that the other submission channels only account for 8% of the total number of submissions and that the draft modifications are also largely made online. It can be said that the taxpayer is increasingly using this self-service approach, carrying out all the procedures themselves or through their collaborator. Likewise, in more than 50% of cases, appointments are also requested online.

V.- In development of the fifth point of the agenda , the President addresses those present to open a floor.

Mr. Carlos Berrocal Rangel, representative of the Professional Association of Accounting and Tax Experts (AECE), intervenes first to indicate that there is a problem with the VERIFICA application, since it cannot be accessed as “social collaborators” but only through the figure of the power of attorney. Mr. Rufino de la Rosa Cordón responds by pointing out that, as there is a prior notification within the procedure, it is not possible to access the application except through the power of attorney, but that this proposal for the participation of the social collaborator within the procedure will nevertheless be analyzed.

The President added that, in this regard, it is important to highlight that the Tax Agency is fundamentally concerned about respecting the confidential nature of taxpayers' data, as enshrined in Article 95 of the General Tax Law.

Mr. Jesús Sanmartín Mariñas and Mr. Luis del Amo Carbajo, both representatives of the General Registry of Tax Advisors / Registry of Tax Advisory Economists, point out below that problems are arising with the possibility of “compensation” of amounts between spouses and with the cadastral data offered by the application. This last problem gives rise to numerous requirements. Mr. Rufino de la Rosa Cordón responds that the applications are evolving to be as fine-tuned as possible, especially in view of the upcoming “Renta Web”. However, it is reported that the cadastral data must be corrected in the Cadastre itself, otherwise these errors will be supplied again by the General Directorate of Cadastre to the Tax Agency.

Mr. Luis del Amo Carbajo and Mr. Rafael Gil March then raise the issue of the five-day advance notice on the general deadline for direct debit and the impossibility for communities of property to resort to this procedure. They are therefore requesting a meeting with the banking institutions within the framework of the Forum. Mr. Rufino indicated that this request should be directed to the Forum Secretariat and it would be forwarded to the banks. Mr. José Luis Tonda Martínez, representative of the General Council of Colleges of Administrative Managers, intervenes and indicates that said request will be processed the following day. The President concluded by pointing out that all necessary efforts will be made to improve this situation.

The problem of removing the printing module then arises. To the latter, Mr. Rufino de la Rosa Cordón responds that the new procedure for the next campaign will modify the entire scheme and these printouts will no longer be necessary, since the Agency will have online the content of the statements.

It is then commented that there are problems of lack of coordination with the appointment and that this matter should be dealt with in the Working Group or even a group could be created. ad hoc "to address this problem. The President responded that the proposal would be studied.

There were no further statements and the meeting was adjourned, with thanks to all participants and the Tax Agency's commitment to work on improving communication channels.