Last December, the Ministry of Finance and Public Administration posted on its website the mid-term evaluation of the effects of Law 11/2021, on measures to prevent and combat tax fraud, which had entered into force, in general, on July 11, 2021. This assessment responds to the fulfillment of milestone 377 of the first reform of component 27 of the Recovery, Transformation and Resilience Plan (PRTR). Spain's international commitment, in relation to component 27, the fight against tax fraud, not only consisted of approving a law against tax fraud, law 11/2021, but also of carrying out two evaluations, an interim one in the last quarter of 2022, and a final one, committed for the end of 2023.

The evaluation report was prepared with the help of the Large Business Forum, the General Council of Colleges of Administrative Managers of Spain and the Spanish Association of Tax Advisors (AEDAF). Furthermore, the Tax and Competitiveness Foundation (FIyC) and the FIDE Foundation created separate working groups, whose reports were taken into account and cited in the mid-term evaluation. These groups have continued their work to collaborate on the final evaluation of Law 11/2021. The State Secretariat for Finance and the Tax Agency would like to thank all these entities for their collaboration and the work of the professionals in carrying out the assessment.

The mid-term evaluation report assessed the 22 main reform measures incorporated into Law 11/2021. On the one hand, the five measures that were expressly mentioned in the CID (Council Implementing Decision, or Council Implementing Decision). These measures are as follows:

1. Limiting cash payments for certain economic transactions, facilitating the traceability of transactions and making fraudulent behaviour more difficult.
2. The extension of the subjective and objective scope of the system of the list of debtors to the Public Treasury.
3. The ban on dual-use software.
4. The expansion of the concept of tax haven based on the criteria of transparency, zero taxation and harmful preferential tax regimes; that is, the new concept of non-cooperative jurisdiction.
5. The incorporation of the reference value as a new tax base for property taxes.

Given the short time that has elapsed, there is not always sufficient data and experience to assess the effects of the corresponding measures. Furthermore, not all the regulatory developments of Law 11/2021 had been possible. It is worth noting here that with the approval of Order HFP/115/2023, the list of non-cooperative jurisdictions was detailed, which represents the first express update of the Spanish list of tax havens since its establishment in 1991.

It is very important to refer to the statistical data of the Bank of Spain when assessing not only the measure to limit cash payments, but also the improvement in the fight against fraud. These figures reflect the continued increase in credit card payments, while at the same time cash withdrawals from ATMs are declining.

In relation to the five measures included in the CID , and in general, not only with the others, but also with the work of the Tax Administration, and the improvement of the tax awareness of citizens, it is interesting to evaluate the reduction of tax fraud by comparing tax magnitudes with certain macroeconomic variables. This is the approach also included in the Tax Agency's 2020-2023 Strategic Plan. The most relevant conclusion is that the aggregate tax base of the main taxes has grown more than nominal domestic demand. The most significant boost came in 2021, the year the anti-fraud law was passed, and in the evaluation report for that year, the difference was already 4.7 points.

In addition to the five measures mentioned above, the mid-term review analyses 17 other measures, some of which relate to specific taxes, such as the exit tax (or exit tax) which is applied in IRPF , or the new regulation of the SICAV which is applied in the Corporate Tax.

There are also measures that refer to the application of any tax in the tax system, such as the new system of surcharges for late voluntary payments, or the cases of non-application of surcharges, replacing them with late payment interest. These measures, which encourage and facilitate voluntary compliance, even if late, by the taxpayer, have been highly valued by reports and contributions external to the tax administration.

There are also measures that give powers to the tax authorities, such as new assumptions of liability or the possibility of adopting precautionary measures in the suspension procedure. It is expressly recognised here that these measures are considered necessary to avoid pathological cases, but that it is appropriate to reinforce the motivation and proportionality in their adoption, as well as to speed up the resolution of claims against them, allocating resources to this effect, which is already being done.

Those interested are advised to read this mid-term evaluation in full and, of course, in a few months, the final evaluation, which will also include the reform proposals to improve the prevention and fight against fraud, and to facilitate compliance with taxpayers' tax obligations.