'Operación Ballesta' (Operation Crossbow)

• More than 250 officials from the Tax Agency complete a two-day operation in seven autonomous communities with searches in 60 premises belonging to 45 companies

• The scrapping centers hid 50% of the sale of spare parts to workshops and individuals, generating fraud in Corporate Tax and VAT estimated at 70 million euros annually.

• Profit margins were even negative and declared activity for the sale of spare parts was practically non-existent in some cases.

• Inspection proceedings have been initiated against all the companies and ten of their partners and directors.

June 10, 2015.- The Tax Agency has today completed an anti-fraud operation against the black market sales of vehicle spare parts by scrapyards in seven autonomous communities. The inspected companies could have hidden 50% of their spare parts sales from the Public Treasury, generating fraud in Corporate Tax and VAT estimated at nearly 70 million euros per year.

The operation, called 'Ballesta', involves the start of inspections on 45 companies dedicated to the wholesale trade of scrap metal and the sale of spare parts, the latter being the area where the fraudulent activity is concentrated. Since yesterday, more than 250 officials from the Tax Agency have been registering these Authorized Centers for the Treatment of End-of-Life Vehicles (CAT), located in Andalusia, Aragon, the Balearic Islands, Castilla-La Mancha, Catalonia, Galicia and Madrid.

In parallel to the raids and searches, inspections have also been initiated against ten individuals who are partners and directors of the companies under investigation.

Sales in black

In the course of the previous investigations, begun in 2014, the Tax Agency has been able to verify that these scrapping centers hid part of the income from the sales of parts or accessories of the vehicles that they acquired for scrapping, thereby evading due taxation in both direct taxation (Corporate Tax) and indirect taxation (VAT).

CAT centres receive or collect vehicles at the end of their useful life to carry out the decontamination and treatment operations regulated by the corresponding regulations and, subsequently, they sell these vehicles wholesale as scrap, or they sell spare parts and elements to individuals, automotive workshops and repair centres.

It is in this second activity where the Tax Agency has detected black market sales. Much of the payment for spare parts is usually made in cash, which makes it easier for the investigated companies to conceal their transactions. These companies include large scrapyards that acquire tens of thousands of vehicles each year for scrapping or selling spare parts.

Negative activity margins

From the investigations carried out prior to the entries and searches of these two days, the Tax Agency has been able to determine the existence of abnormally low profit margins on declared sales in the investigated companies, even negative margins in many cases.

At the same time, a very significant asymmetry was detected between the activity profile declared by these companies and the real one. The inspected scrapyards appeared to concentrate their activity on the wholesale sale of scrap metal, which in some cases accounted for practically all of the declared activity. However, the main activity in these dismantling centres is the sale of spare parts, which, according to estimates, may represent 60% of the total real sales in this sector.

The actions carried out, coordinated by the Tax and Financial Inspection Department of the Tax Agency, have involved the Inspection units of seven delegations of the Agency, as well as the Central Computer Audit Unit of the National Fraud Investigation Office (ONIF), with the support of Customs Surveillance and Mossos d'Esquadra personnel in the preparation of the entry and registration device, to which the Civil Guard has also joined in its effective implementation.

Operation 'Ballesta' is part of the guidelines of the Tax Control Plan designed by the Tax Agency for 2015, which considers as a priority, in its fight against the underground economy, the strengthening of interventions carried out through the appearance of the Tax Inspection in the offices and homes where the economic activity of taxpayers is carried out, in order to detect and regularize these fraudulent operations.