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2020 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 2020, more than 1.62 million internal tax control actions were carried out, of which the vast majority were verification actions (1.56 million). Of this total number of checks, 29,567 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.

The slight decrease in the number of actions compared to 2019 is mainly due to the difficulty of carrying out face-to-face visits to taxpayers as a result of the pandemic, but, in any case, there is a maintenance of the actions of the Tax Agency in this year 2020 in which the activity of the Agency has been affected by the exceptional circumstances caused by the health situation.

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 2020 amounted to 3,423 million euros. This amount includes both debt assessed and settled in the 2020 financial year itself, as well as debt assessed in previous years and settled in 2020, but does not include debt assessed in the financial year but contained in reports that have not been confirmed at the end of the 2020 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 2020, 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. This type of inspection has resulted in debts settled for an amount of 437 million euros in 742 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, with more than 2,100 actions in which it has been possible to reveal the existence of sales that the taxpayer had hidden from the tax authorities.
    • 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. It should be noted that the participation of these specialized units, in addition to facilitating the discovery of hidden income through the analysis of dual-use software used in the management and accounting of economic activities, is 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 Computer 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 businessmen in the sector so that they redirect their tax conduct.

  • Actions to exploit international information from DAC1, CRS, DAC2 and FATCA. Specifically, in 2020 the ONIF has automatically exchanged information with other countries and jurisdictions relating to the following categories:

    • Information on income from work, income from directors, income from pensions, income from life insurance products, as well as ownership and real estate income (OECD and DAC1 income)
    • Information on foreign financial accounts (CRS, FATCA and DAC2)
    • Country-by-Country Reports (CBC and DAC4)
    • Information on consultations and advance tax agreements with cross-border effects and on transfer pricing (DAC3)
    • Information on mechanisms with cross-border tax planning effects (DAC6) has started to be received

  • Actions on small businesses through procedures specialised in the size of the entities and the characteristics of their tax risks, by promoting abbreviated checks.

International taxation

Throughout 2020, 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, completing 263 actions, and on the significant assistance of its officials to working groups in international organizations, which are essential in the area of international taxation, as well as participation in inspection action planning functions.

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

The ONFI provides support and collaboration in inspection procedures, focusing on complex issues in international taxation. This activity is particularly relevant in the area of inspections of the Central Office of High-Income Taxpayers. In 2020, the ONFI collaborated in 179 inspections, of which 82 have been completed, involving adjustments to the tax base estimated at around 3,076 million euros. In the previous year, the company participated in 142 inspections, of which 74 were completed, with a total amount of adjustments to the tax base of more than 1.8 billion euros.

In relation to the APAs (advance agreements for the valuation of related-party transactions), the ONFI's actions, through these advance agreements on transfer pricing, seek to reduce litigation and improve the taxpayer's legal certainty, guaranteeing collection in accordance with the requirements of the law. In 2020, the ONFI participated in the management of 203 files. Of this total, 71 applications were finalised, compared to 66 in 2019, 54 were approved, compared to 25 in 2019, 8 were rejected, in 7 cases the applicants withdrew and in 2 cases they were not admitted. The APAs estimated in 2020 have made it possible to guarantee tax bases (generally, in the following four years) for an estimated value of more than 3,477 million euros, compared to approximately 2,100 million guaranteed in the APAs estimated in 2019.

In turn, last year 2020, ONFI participated in 427 mutual agreement procedures regarding direct taxation, a figure that has increased significantly in recent years: 251 in 2017, 307 in 2018 and 371 in 2019. In these procedures, the ONFI's actions aim to eliminate the economic double taxation generated by inspection actions and, at the same time, adequately defend the Spanish tax bases both in regularizations with cross-border scope carried out by the Spanish Administration, as well as those carried out by the administrations of other countries. Of this total number of procedures, 110 were completed in 2020, compared to 108 in 2019. The tax bases affected by the mutual agreement procedures in 2020 amounted to more than 200 million euros, this figure being more than 800 in 2019.

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 number of management control actions on this tax completed in 2020, regardless of the start year and the reference campaign, was 722,148, 0.4% less than in 2019.

In addition, and within the framework of this tax, 147,648 settlements have been made for withholding control, 52.5% more than in 2019.

The results obtained are reflected in Table No. 33. Control actions in the Personal Income Tax (Annex). New window

Corporation Tax and Value Added Tax

During 2020, the actions completed throughout the year in relation to Corporate Tax reached 58,689 actions (6.6% more than in 2019), and those in relation to Value Added Tax reached 318,966 (0.6% more than in 2019). In addition to the corporate tax figures, there are 26,554 settlements for split payments (6.4% more than in 2019).

Regarding taxpayers registered in the register of monthly VAT refunds, the actions carried out throughout 2020 have been 19,632, compared to 18,067 the previous year. This represents a growth of 8.7%.

Actions on taxpayers in Modules

In the case of taxpayers subject to the objective assessment regime, and under the criterion of actions completed in 2020, regardless of the start year and the reference campaign, 13,046 actions have been carried out, compared to 18,390 carried out in 2019 (29% less).

The results obtained are collected in Table No. 34. Results in the Modules regime (Annex). New window

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 2020, a total of 515,442 letters and requests were issued, in addition to 36,981 hearing procedures and generating a total of 37,158 induced self-assessments submitted for an amount of 43.3 million euros.

There were also 36,537 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.

Reduction of negative tax bases

During 2020, the Tax Agency has worked on checking negative tax bases or deductions in the quota to be offset in future years in the field of Corporate Tax, proceeding to verify the existence of their balance, its accuracy and its origin. These actions, although they may not be reflected in cash terms in the audit year, have a positive impact on gross and net revenue in future years. In 2020, the results of these actions reached the figure of 2,896 million euros, of which the fundamental part derives from inspection actions.