Operation 'Carpo'

• Investigators believe that several of the 75 premises affected by the intervention have been operating with hidden sales software; programs that will be banned in the new package of anti-fraud measures
• The actions taking place today are the start of a process to inspect 62 companies, the majority of which are central fruit markets, along with 18 related individuals
• The companies being investigated have cash receipts representing up to 80% of sales, which is abnormally high for the sector
• The operation, launched in 13 Autonomous Communities, involves more than 430 Tax Agency officials, and has been extended to the País Vasco and Navarra through the coordinated actions of their respective Regional Authorities

October 25, 2018 - The Tax Agency has today launched a major nationwide operation against tax fraud in the wholesale fruit and vegetable sector. The operation, dubbed 'Carpo', will take place throughout the day, seeing 75 entrances into premises located in 13 autonomous communities. Inspections will also begin on 80 taxpayers - 62 companies and 18 individuals who are partners or administrators of the investigated companies - related to these premises, the majority of which are in central markets.

The investigations launched by the Tax Agency affects premises located in Andalucía (11), Aragón (5), Asturias (2), Baleares (1), Canarias (6), Cantabria (1), Castilla y León (3), Extremadura (2), Galicia (11), Madrid (14), Murcia (3), La Rioja (1) and Comunidad Valenciana (15), which requires the participation of more than 430 Tax Agency officials and police support to enter the properties safely. In turn, the operation has been extended to the País Vasco and Navarra, through the coordinated actions of their respective Regional Authorities.

Use of sales concealment software

Entries began first thing this morning, with tax inspectors and Information Audit Units appearing in the premises of the companies being investigated, with a view to directly access their real accounting or auxiliary documentation and information, including the IT systems for processing information and the payment terminals used.

The Tax Agency investigators have evidence that lead them to believe that several of the companies affected by Operation Carpo have used IT programs to conceal parts of their sales. The aim of these programs is to manipulate true sales, erasing the total amount of a transaction or modifying its amount.

In the fruit and vegetable wholesale sector, is has been found in other sectors, they have also detected sales concealment software; programs that will be banned with the roll-out of the new package of anti-fraud measures, which is currently in the draft stage.

To detect these programs, which make it hard to know the true activities of companies, citizen collaboration through tax complaints is incredibly important.

Background

Operation Carpo has a relevant precedent with Operation White, carried out in February 2016 in fish sales in Mercabarna, in Barcelona. The inspections had an immediate effect, whereby the amounts paid by the inspected taxpayers rose by 37%, whilst other companies dedicated to fish wholesales who had not been involved int he operation, and who had a presence in the same central market, even saw a 62% increase in amounts paid.

Disproportionate cash receipts

In the case of the previous investigations that have led to Operation Carpo, an analysis of the affected companies showed that they had a proportion of cash receipts that far exceeded the average of the fruit wholesale sector, and which, in some cases, were above 80% of total sales. The use of this payment method makes it easier to conceal true sales, given the difficulty of following cash.

Meanwhile, investigators found that the operating margins of these companies were significantly less than the normal margins of the sector, in some cases even representing permanently negative figures over several fiscal years. Other economic capacity indicators observed in administrators, account handlers or partners of these companies, which were incompatible with income declared by the individuals, also decisively influenced the selection of objectives to verify.

Operation Carpo has been coordinated by the Finance and Tax Inspection Department of the Tax Agency, with the participation of 299 officials, including staff from the Information Audit Units, as well as the support of police officers and 133 Customs Surveillance officials of the Tax Agency.

Relevance of sector-based macro operations

These activities form part of the fight against the underground economy, which is still one of the Tax Agency's priority objectives, as established in the General Guidelines of the Annual Tax and Customs Control Plan for 2018. The participation of the Computer Audit Units is essential for this task.

The volume of charges uncovered under the framework of their work is significant. From 2014 to now, tax charges have been settled for over 1.3 billion euros, following actions with the participation of Computer Audit Units (214 million euros of which corresponds with this year so far), through almost 17,000 inspections (more than 3,600 of which correspond with this year so far).

The actions carried out as part of the 15 macro operations coordinated nationally over the last few years are particularly notable (not including Operation Carpo), with more than 1,190 cases initiated, 659 of which have been finalised with a total amount paid of more than 131.8 million euros.

These coordinated activities, beyond facilitating the detection and regularisation of tax fraud, also pursue two particularly relevant objectives for the Tax Agency. On the one hand, compare the sectorial performance with facts and evidence, using information on real ratios, cost structures, payment methods, etc.; and on the other, transmit a dissuasive message to all the groups involved, so that, where relevant, they can restructure their activities towards the proper payment of tax obligations.

In this regard, we plan to monitor their adherence to such obligations after these inspections. The inspection will take priority with taxpayers whose gross tax bases are, in proportion to their activity, significantly less than the sector averages.