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 most extensive powers that the regulations attribute to the Tax Administration.

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 2016, 226 offences against the Public Treasury have been reported to the Tax Authorities relating to a total of 210 taxpayers (irrespective of the Customs Surveillance activities on tax fraud offences). Tax fraud totalled 278.33 million euros. These figures are shown in the following table of the Appendix:

The main magnitudes resulting from selective control activities are reflected in the Annex table:

Inspection activities on domestic tax contributions

These activities comprise all of those carried out by the bodies of the Financial and Tax Inspection division of the Special Delegations and of the Central Delegation of Large Taxpayers, in exercising the administrative functions attributed to the tax inspection by article 141 of the General Taxation Act.

The total amount of the debt settled in 2016 amounted to 5,059.49 million euros. This amount includes both debt called and settled during 2016, as well as debt called in prior years and settled in 2016, but does not however include debt called during the year in inspections not confirmed at 2016 year end.

By groups of programs, specific activities pertaining to inspections and investigations have increased (5,752 cases with an increase of 1.54% with respect to the 5,665 cases in 2015) and there has been a drop in Sectorial Inspections (2,931 cases with a decrease of 4.65% with respect to the 3,074 files completed in 2015), inspections on Professionals (2,845 cases with a decrease of 8.67% with respect to the 3,115 cases completed in 2015) and Companies and Partnerships (2,455 cases and a decrease of 4.44% compared to the 2,569 in 2015).  

Inspection activities on tax contributions from taxes on Foreign Trade and on Special Taxes

These inspection operations include those carried out by the bodies of the Customs and Excise Duties Inspection division of the Special Delegations and of the Central Delegation of Large Taxpayers, in order to fight fraud that affects both the financial interests of the European Union (that is, equity and European aids for agricultural product exports) and the domestic tax contributions from taxes on foreign trade operations, as well as Special Taxes.

In 2016, 3,825 verification and investigation cases were carried out, settling 248.77 million euros in tax debt.

Special Taxes:

In 2016, the checks focused essentially on the following fields:

• Exemptions and cases of non-subjection to the Special Tax on Certain Means of Transport, along with the review of the gross tax bases declared, particularly in relation to cars and vessels not operating under the Spanish flag, corresponding to people or entities that are resident in Spain or that are owners of establishments located in Spain.
• Improper use of subsidised diesel fuel.
• Checks on the electricity generation by producers in facilities that are not registered in the Territorial Register of Special Taxes in the activities intended for this purpose in the Special Tax regulations, as well as the application of exemptions from the Tax on Electricity.
• Checks on the declaration and income of the Tax on the Value of Electricity Production, of the Tax on Fluorinated Greenhouse Gases and of the Special Tax on Carbon.
• Checks on the exemption corresponding to the use of partially denatured alcohol with general denaturing agents.
• VAT fraud derived from operations with products subject to Special Taxes.

Foreign Trade:

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 checks are conducted at customs on goods in order to detect fraudulent practices. In this regard, the undervaluation of imported goods is considered to be one of the most significant focal points of fraud at present, with clothing, footwear, handbags and leather goods being the most affected sectors. Other checks are intended to verify whether the true price of the goods corresponds to the commercial documentation presented at the moment of customs clearance and, if applicable, justification is requested to clarify any questions that may arise for the customs authorities over abnormally low declarations of values. Also, checks are performed in cases where the value has not been increased, due to there being items to be included in the customs value such as adjustments to the price paid or payable and, finally, where certain circumstances arise - especially linkage - which prevent the transaction value from being used and require the use of secondary valuation methods.

Similarly, inspections are performed on the origin of goods and on the the application of anti-dumping duties in order to prevent fraud in the form of the presentation of certificates of origin and invoices that are false or have been tampered with, in the execution of sales - either real or fictitious - in the true country of origin with other third-party countries with preferential treatment or without anti-dumping duties, and in the incorrect application of the additional code that arises from the payment of an anti-dumping duty lower than the general rate or for a zero amount. In addition, controls are made on the tariff classification of goods.

Furthermore, the specific problems in the import of agricultural and fishing goods are dealt with. The experience acquired over time has served to create the appropriate risk profiles that have allowed the Agency to monitor importer companies in detail and to tackle cases of fraud that are detected, insofar as possible. These situations are determined by the characteristics of the levy on certain products, with a series of special measures that allow imports to be exempt, but associated with certain strict requirements, the implementation of which implies a very high tax charge. They include the tariff quotas through which exemptions or reductions of the rights applicable to the merchandise are established, but with certain quantitative limits that require checks to be performed to ensure they are not applied higher than they should be; additional rights on certain products of variable amounts, according to the evolution of international prices; and securities declared in customs or the possible exemption of rights if the merchandise is eligible for the end-use regime.

In the last few years, the existence of schemes has come to light that are aimed at bringing the merchandise into the EU customs territory through companies whose sole purpose is to go to the import office, hiding the identity of the real recipients of the merchandise. In this way, the import becomes the first phase of a chain of tax violations that affect domestic tax contributions in the subsequent phases.

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, money laundering and other frauds

With regard to combating smuggling and money laundering, the Customs Surveillance units carry out operations aimed at repressing smuggling and illegal trafficking of narcotics, tobacco, counterfeited products and other items, as well as money laundering related to these criminal activities, in coordination with other State entities, carrying out their surveillance and control activities at sea, in the air and on land.

The Customs Surveillance Units also carry out control and support activities for the other divisions of the Customs and Excise Duties Department, including preventive checks in customs precincts through non-intrusive inspection techniques, currency controls, and checking the security of the international transportation chain.

They also carry out activities to combat tax fraud and the black market economy, collaborating with other Departments of the Tax Agency, either in the criminal sphere or in administrative channels. The growing complexity of fraud, as well as the internationalisation of its structures, requires external coordination and the need to optimise the Tax Agency's resources through cooperation and collaboration between the different functional divisions.

In 2016, as a result of these activities, 91,100 kg of hashish, 11,657 kg of cocaine and 14,051,074 packets of cigarettes were seized, representing a total of 1,050 criminal offences and 8,120 smuggling offences. Furthermore, 74 forgery crimes and 2,158 offences have been reported, as well as 72 money laundering offences.

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