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2019 Report

4.2.1. Control over internal taxes

Control actions on internal taxes include the following actions, excluding those related to special taxes, environmental taxes and those on foreign trade:

  • Inspection actions on internal taxes.

  • Management control over the majority of taxpayers and control over taxpayers included in the modular taxation system.

  • Managerial control over large companies.

The purpose of inspection control actions is to detect and regularise the most complex breaches and to pursue the most sophisticated forms of fraud. Their selective nature makes them fall on taxpayers who present a higher tax risk.

These actions are carried out by the bodies of the Special Delegations and by the bodies of the Central Delegation of Large Taxpayers that are responsible for carrying out tax inspections.

Its implementation has a large investigative component and generally requires an exhaustive review of the tax situation of the taxpayer subject to inspection, for which the bodies that carry it out are endowed with the broadest powers that the regulations attribute to the Tax Administration.

The purpose of management control is to detect and correct less complex errors and non-compliances and is characterised by the fact that it is aimed at the general public during annual campaigns, with strong support from the available information and the computer system that analyses it. It refers to obligations considered individually, is based on formal and documentary controls, without reviewing the taxpayer's business accounting, and is normally carried out from the offices themselves.

Management control is carried out by the corresponding bodies of the Special Delegations, the Central Delegation of Large Taxpayers and, where appropriate, the National Tax Management Office.

Along with these controls, management actions on large companies are computed, which are those whose volume of operations exceeds the figure of 6.01 million euros during the immediately preceding calendar year, calculated in accordance with article 121 of Law 37/1992, of December 28, on Value Added Tax, which determines that they have specific tax obligations that are different from the rest of the taxpayers.

These actions are carried out by the bodies of the Financial and Tax Inspection area, through the Large Business Management Units (UGGES) within the scope of the Special Delegations, as well as by the Management Units and the Tax and Customs Control Unit, integrated respectively in the Tax Assistance and Services Unit and in the Tax and Customs Control Unit of the Central Delegation of Large Taxpayers.

The actions of management control over large companies include, among others, the verification of the refunds provided for in tax regulations and the performance of data verification and limited verification actions that may give rise to subsequent liquidations.

Along with the above verification actions, this indicator also includes investigative and auxiliary actions.

In 2019, more than 1.66 million internal tax control actions were carried out, of which the vast majority were verification actions, 1.61 million. Of this total number of checks, 29,631 nominal actions were directed at large companies, multinationals and tax groups, personal assets, corporate abuse and the black economy, with these types of actions consuming a large number of resources, also characterised by their high qualification.

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.

These actions may be of a verification, investigative or auxiliary nature.

The total amount of debt settled in 2019 amounted to 4,719.05 million euros. This amount includes both debt assessed and settled in the 2019 financial year itself, as well as debt assessed in previous years and settled in 2019, but does not include debt assessed in the financial year but contained in reports that have not been confirmed at the end of the 2019 financial year.

Among the actions carried out by the Inspection in the area of internal tax control, the following stand out:

  • Control of large estates: Since its creation in 2018, the Central Unit for the Coordination of Control of Relevant Assets (UCCCPR) of the National Fraud Investigation Office has focused its efforts on the preparation of a complete "census" of taxpayers with high economic capacity, the delimitation of their specific tax risks or frauds, the study and development of appropriate investigation and selection mechanisms to detect said risks in specific taxpayers and the promotion of initiatives regarding the effective obtaining and/or management of relevant information. During 2019, a significant effort has been made in the area of actions to verify tax contingencies associated with taxpayers who are listed as holders of significant assets. The impetus given to this type of inspection has resulted in debts settled for an amount of 607.6 million euros in 880 cases. These figures are complemented by an analysis of the taxable bases and amounts declared in the Personal Income Tax by taxpayers with significant assets.

  • Actions on the underground economy, focused on:

    • discovery of hidden sales;

    • entries and records with Computer Audit Units, which, in addition to facilitating the discovery of hidden income by analysing dual-use software used in the management and accounting of economic activities, are extremely efficient from the point of view of obtaining evidence and the duration of the checks;

    • coordinated actions, consisting of the simultaneous initiation of verification and investigation actions, through personal appearance and with the participation of the Internal Audit Units, and which seek not only to discover hidden sales by the inspected taxpayers, but also to promote voluntary compliance by transmitting a message to the group of business owners in the sector so that they redirect their tax conduct.

  • Reduction of negative tax bases, pending deductions and amounts to be offset: During 2019 they have risen to 7.2 billion euros.

  • Actions to exploit international information from DAC1, CRS, DAC2 and FATCA.

  • Checks derived from census purification, which allow induced income, recovery of amounts and seizure of accounts.

International taxation

Throughout 2019, the National Office of International Taxation (ONFI) has played its important role in the fight against international tax fraud and avoidance. The Office's activity has focused on both inspection activities and the significant assistance of its officials to working groups in international organizations, which are essential in the field of international taxation, as well as participation in inspection action planning functions.

The aforementioned inspection actions include the instruction of advance agreements for the valuation of related-party transactions (APA), negotiation in mutual agreement procedures in matters of direct taxation and actions of support and collaboration in inspection procedures, among others.

In relation to the APAs, the ONFI's actions, through these prior agreements on transfer pricing, seek to reduce litigation and improve the taxpayer's legal certainty, guaranteeing collection in accordance with the legal requirements in an efficient manner, with the lowest possible cost for both the Administration and the taxpayer. During 2019, the ONFI has participated in the management of 220 APA files (which is 20% more than the previous year), having finalized 66, of which 25 were estimated. These APAs, which have been finalised with an estimation agreement, imply guaranteeing, in terms of tax base, more than 2.1 billion euros in the future.

In turn, last year 2019, the ONFI participated in 380 mutual agreement procedures in direct taxation matters, compared to 307 in 2018. In these procedures, the ONFI continues to adequately defend Spanish tax bases - primarily in situations of double taxation - both in regularisations with a cross-border scope carried out by the Spanish Administration, and in those carried out by administrations in other countries. Of these procedures, 104 were completed, compared to 50 completed in 2018.

The ONFI also supported and collaborated in inspection procedures, focused on complex issues of international taxation. This activity is particularly relevant in the area of inspections of the Central Office of High-Income Taxpayers. In 2019, the ONFI collaborated in 142 inspections, of which 76 have been completed, resulting in adjustments to the tax base estimated at around 1.84 billion euros. In the previous year, the company participated in 161 inspections, of which 100 were completed, with a total amount of adjustments to the tax base of more than 3.3 billion euros.

The data on collaborations for each financial year are subject to high variability, as demonstrated by the historical series, since the taxable bases regularised in collaborations depend on many factors, in addition to being normally the result of actions lasting more than one year. Therefore, a mere comparison with the previous year is not significant. In fact, just as the regularised bases in 2019 differ by 1.4 billion from those regularised in 2018, those of this last year differ by 1 billion from those of 2017. The high figure for 2018, which marks a peak in the historical series, includes two specific files with very high regularization rates that are difficult to repeat.

Manager control over internal taxes

The purpose of management control is to detect and correct less complex errors and non-compliances. It is addressed to verifying in general all the tax debts individually considered, on the basis of the information held by the Tax Agency. It is based, fundamentally, on computer processes and documentary checks (without inspection of the taxpayer's company accounts), usually carried out in its own offices.

Management control is carried out by the Tax Management bodies; by the Tax Assistance and Services Department with respect to taxpayers assigned to the Central Delegation for Large Taxpayers (DCGC) and by the Large Business Management Units, dependent on the Financial and Tax Inspection area, with respect to taxpayers over whom their powers are exercised (among others, those over whom the DCGC does not exercise its powers but whose volume of operations exceeds the figure of 6.01 million euros during the immediately preceding calendar year).

Personal Income Tax

The management control actions on this tax, in 2019, have focused mainly on the personal income tax returns for the 2017 financial year. As of the date of this report, the overall results of the 2017 IRPF audit campaign have resulted in a total collection of 523.6 million euros and the completion of 534,112 settlements.

The results obtained are reflected in Table No. 31. Personal Income Tax Results New window (Annex).

In addition, the 2018 Personal Income Tax control campaign has been launched, which will extend throughout 2020 and whose data will be offered in the Tax Agency's Report for that year.

From 2020 onwards, it has been considered that a more accurate picture of the actions carried out can be provided by measuring not only the actions carried out in relation to a specific year and started in the previous year, but also all those completed in the year in question, regardless of the start year and the reference campaign. Based on this new activity indicator, the actions carried out in relation to Personal Income Tax during 2019 total 725,068 actions, to which 96,836 settlements for withholding control should be added (as a reference, the 2018 figures based on this indicator would be 716,478 actions, and 88,563 for withholding control).

Corporation Tax and Value Added Tax

Regarding Corporate Tax for the 2017 financial year, the audits initiated in 2018 and completed in 2019 have resulted in 30,595 settlements, for a total amount of 694.569 million euros. As regards Value Added Tax for the 2017 financial year, 117,759 provisional settlements have been made for a total amount of 1,620.625 million euros. These figures include the results of control actions, the consequence of which are prior contract settlements, deductions on refunds and compensations, and negative gross tax bases.

In these taxes, it has also been considered that, from 2020 onwards, a more accurate picture of the actions carried out can be provided by measuring not only the actions carried out with respect to a specific year and started in the previous year, but also all those completed throughout the year in question, regardless of the start year and the reference campaign. Based on this new activity indicator, during 2019 the actions carried out in relation to Corporate Tax reached 55,079 actions, and those in relation to Value Added Tax, 317,079. To the corporate tax figures we should add 24,957 settlements for fractional payments. As a reference, the 2018 figures based on this indicator would be 55,395 actions in Corporate Tax and 313,747 in VAT, plus 22,226 for installment payments.

Finally, with regard to taxpayers assigned to the register of monthly VAT refunds, the provisional settlements related to the 2018 financial year, started in that same year and completed in 2019, have amounted to 6,459, for a total amount of 92, 4 million euros.

It has also been considered that, from 2020 onwards, a more accurate picture of the actions carried out can be provided by measuring all those completed throughout the year in question, regardless of the start year and the reference campaign. Based on this new activity indicator, during 2019 the actions carried out in relation to taxpayers enrolled in the monthly VAT refund regime have reached 18,067 actions (for reference, the 2018 figure based on this indicator would be 16,016 actions). .

Actions on taxpayers in Modules

In the case of taxpayers subdued to the objective evaluation system, the results of the control actuations mean the issue of audit reports and the broadcast of provisional settlements. The main data are indicated in Table No. 32. Results in the Module regime New window (Annex).

The figures for provisional settlements made under the Modules regime are included in the total number of actions carried out in relation to personal income tax.

Verification of periodic tax returns.

On the basis of the census of employers, professionals and withholders, an automated inspection is performed of compliance with responsibilities of filing of periodical self-assessments (of Value Added Tax and withholdings and split payments).

During 2019, a total of 552,062 letters and requests were issued, in addition to 42,947 hearing procedures and generating a total of 36,605 induced self-assessments submitted for an amount of 65.5 million euros.

There were also 37,499 settlements for installment payments of Personal Income Tax, Corporate Tax and the simplified VAT regime, for an amount of 40.4 million euros.

These figures are part of the total annual settlement figures for each of the taxes referred to.