4.1.1. Selective control and investigation

The selective control and investigation actions have the purpose of detecting and regularising the most complex defaults and pursuing the most sophisticated forms of fraud. Their selective nature makes them fall on taxpayers who present a higher tax risk. They have a large investigation component and entail, in general, a review of the overall tax situation subject to inspection. For this reason, the bodies which carry them out have the fullest powers attributed to the Tax Administration by the regulations.

The selective control actions are carried out by the Financial and Tax Inspection bodies when they refer to internal taxes, and by the Customs and Excise Duties bodies with regard to taxes on foreign trade and the Special Taxes.

These activities usually terminate with the corresponding administrative settlements which regularise the taxpayer's situation, or with the submission of a report to the Public Prosecutor's Office when the activities reveal indications of offences against the Public Treasury, money laundering or smuggling.

In 2014, 391 charges were submitted to the Public Prosecutor's Office for offences against the Public Treasury for a total amount of 305.04 million euros. These details are shown in Table 19 of the Annex.

The principal magnitudes resulting from selective control actions are shown in the following table of the Annex:

Internal tax control

Throughout 2014 a large number of actions have been performed, among which we can highlight the following:

• Intensive processing of the various capture sources and information operations.
• Control of international taxation, to prevent the improper use of the regulations and certain special schemes, operations conducted with tax havens, intragroup services and, if applicable, important actions with regard to non-resident professionals, artists or athletes, etc.
• Sectorial control of the direct taxation of corporate persons according to a series of pre-established risks.
• Exploitation of the experience acquired to redefine tax fraud risks in individual persons, through the analysis of the various information capture models available (electricity supply, credit cards and debit charges, etc.)
• Control of networks of issuers of false invoices which act under the protection of the specific characteristics of the regime of modules with a view to verifying possible irregular activities linked with the regulatory modifications of the tax system.
• Control of correct tax payment by professionals, particularly with regard to the abusive use of interposed corporate structures.
• Maintenance of the increasing analysis activity of the new information and communications technologies.

In this tax year, the Financial and Tax Inspection organs continued to reinforce their inspection activity, initiating a total of 99,580 nominal verification and investigation operations (6.8% more than in the previous year and 35% more than in 2011) and clearing almost 5,000 million euros of tax debt.

By control areas, the professionals sector continued to be intensified, with a 35% increase in inspections, and that of companies and partners (+14.6%), land in addition the inspections for the regularisation of incorrectly applied tax benefits were notably increased (+56%).

The inspection actions on refund applications carried out by the Tax Inspection Service are integrated into the Tax Agency's general strategy addressed to integral control of these requests. The essential goal of this control is to guarantee that refund applications are reviewed correctly, attending to their differing characteristics and risk levels, to avoid the payment of inadmissible refunds. In 2014, a total of 3,032 refund procedures were completed.

Throughout 2014, the third year of the "Special plan against the underground economy" implemented by the Tax Agency, there has been a consolidation of the on-site control actions of formal and registry-related obligations in tax risk sectors. Of the 21,075 on-site formal verification operations carried out, once again there was a notable increase in the visits addressed to detecting undeclared rentals (+11.3%), a total of 7,410, and the 11,223 visits (+9.3%) carried out within the framework of the specific programme on the underground economy. In addition, 682 inspections of owners' communities were carried out, 1,174 inspections of invoicing, means of payment and use of cash, and 586 census control actions.

In addition, throughout 2014, new actions have been initiated within the framework of the Visits Plan: the control of the fulfillment of requirements for the application of the deduction for company savings account, the performance of visits to non-residential buildings belonging to individuals and declared in Personal Income Tax as neither leased nor linked to economic activities, company visits to verify issued invoices, and visits to recreational centres.

The programme of on-site actions, during this tax year, made a qualitative leap in the control of the underground economy, thanks to the notable support represented by the Tax Agency's specialised computerised auditing units (UAI) . These are expert units in the detection of electronic manipulations of accounting records and partial concealments of activity. Thus, in 2014 a total of 1,536 actions were carried out (59% more than the previous year) with the participation of the UAI.

In another respect, the Tax Agency continued the strategy addressed to the fight against Intra-Community Value Added Tax fraud schemes. In this line, 12,738 control and monitoring procedures of the Register of Intra-Community Operators and the Register of Monthly Refunds were carried out.

During 2014 the Tax Agency continued its inspection actions on operations with high-denomination banknotes (with face value 500 euros). Similarly, special mention must be made of the control on the entrance into or exit from the country of any means of payment (except nominal cheques) for an amount equal to or more than €10,000 per person and journey, and on movements inside the country of means of payment (except nominal cheques) for an amount equal to or more than €100,000. In addition, these investigations of cash movements include inspections of the operations declared in the annual informative statements presented by the credit institutions concerning deposits, withdrawals of funds, collections and payments for an amount of more than 3,000 euros.

In addition, the Tax Agency continued to inspect the transfer prices in operations conducted by multinationals and large companies with presence in our country, along with actions addressed to the abusive regularisation of the deduction of financial expenses in intragroup operations.

Similarly, the Prior Assessment Agreements on Linked Operations constitute a basic element for preventing risk situations with regard to transfer prices, increasing the taxpayers' legal security and reducing litigious activity. During this tax year the inspection organs processed a total of 90 applications for Prior Assessment Agreements, involving a total tax base of approximately 8,200 million euros. In 2014, 40 applications for Prior Assessment Agreements of linked operations were settled, of which 23 were upheld and 4 dismissed, and in 13 cases the applicants withdrew the request.

Excise Taxes

In 2014, the verifications were centred on the following areas:

• Biofuels contained in petrols and diesel fuels supplied from bonded hydrocarbons stores.
• Improper use of subsidised diesel fuel.
• Derivative beverage factories, verifying that the data shown in the stock accounting records of the establishment matches what is recorded in the financial accounts in relation with the activity for which it is authorised.
• Electricity producing establishments which may be operating in breach of the registration requirements as factories, in accordance with the Special Taxes regulations, along with the application of exemptions from the said tax.
• Exemptions and cases of non-subjection to the Special Tax on Certain Means of Transport, along with the review of the declared tax bases, particularly in relation to vessels not operating under the Spanish flag.
• Control of VAT fraud deriving from operations with products subject to Special Taxes.

Customs Control

The actions in the field of customs control were addressed to reviewing the elements of taxes levied on foreign trade which cannot be checked at the time of customs clearance.

In particular, value controls are conducted in customs on goods related with following matters: The problem of undervaluation of imported goods is considered to be one of the most significant focal points of fraud existing at the present time, the most affected sectors being those of clothing, footwear, handbags and leather goods. In addition, it is verified whether the true price of the goods corresponds to the commercial documentation presented at the moment of customs clearance and, if applicable, doubts are justified which may arise for the customs authorities over abnormally low declarations of values. Similarly, cases are verified in which, when there are items to be included in the value in customs such as adjustments to the price paid or payable, the value has not been increased, and finally the concurrence of circumstances - especially linkage - which impede the use of the transaction value and require the use of the secondary evaluation methods.

Simultaneously, inspections are carried out on the origin of goods and the application of antidumping duties in order to prevent fraud in the form of presentation of false or adulterated certificates of origin and invoices, in the execution of sales - real or fictitious - in the true country of origin with other third-party countries with preferential treatment or without antidumping duties and in the incorrect application of the additional code entailed by the payment of an antidumping duty lower than the general rate or of zero amount. In addition, controls are made on the tariff classification of goods.

In relation to import VAT, emphasis must be placed on the control of the application of reduced rates and of the exemption in releases for free circulation. In addition, fraud in VAT deriving from foreign trade operations is controlled .

Repression of smuggling

In matters of smuggling the Tax Agency carries out, in coordination with other State agencies, surveillance and control actions in the Spanish maritime and air space and, especially, in customs areas, aimed at the repression and control of smuggling of narcotics, tobacco, counterfeits and other goods, as well as related money laundering.

In 2014, as a result of these activities, 134,237 kg of hashish, 12,043 kg of cocaine and 9,599,962 packs of tobacco were seized, signifying a total of 1,659 criminal offences and 12,264 smuggling offences. In addition, 137 intellectual property offences and 109 of money laundering were reported.

The figures on smuggling and the actions carried out during this tax year are shown in the following tables of the Annex: