2020 balance sheet of tax control results

• The health crisis led to prioritising the most advanced actions when the pandemic began, such as checks on large companies, which grew by 7.9%; in turn, those requiring more physical presence and those that could be deferred without time constraints were reduced.
• Inspections have been launched on 126 taxpayers selected with the new tool for detecting false non-residents with significant assets.
• In the area of controlling large technology companies, taxable bases of more than €130 million have been regularised and the calculation of insured bases for future years has been revised upwards to €800 million.
• A special campaign to identify foreign traders selling through online platforms has so far led to the uncovering of VAT bases worth €400 million, and the tax registration of 7,700 companies.
• A project based on artificial intelligence has been launched to detect irregular invoicing.

8 July 2021 .- Last year, the Tax Agency regularized tax bases for a total amount of 3,076 million euros in the field of international taxation, which is 67% more than the previous year, based on 82 inspection checks carried out with the support of the National International Taxation Office. In turn, ONFI participated in the management of 54 Preliminary Valuation Agreements (APA) with an estimated result –more than double that of the previous year– which means guaranteeing future taxable bases for an amount of €3.477 billion, up 66% compared to last year.

In the field of international taxation, there are also new results in terms of actions on large technology companies, with the regularisation of taxable bases for an amount of over €130 million and the upward revision up to €800 million in the calculation of taxable bases secured by APA for the coming years. Given their specificity and the small group size, these actions are difficult to repeat over time.

Adaptation to health circumstances

The inspection activities on multinationals, as well as those carried out in the area of large companies and corporate groups (a total of 21,729 activities, with a year-on-year increase of 7.9%) are among the inspection activities that recorded growth in 2020, despite the difficulties arising from the health crisis, which impacted in different ways on the Tax Agency’s activity as a whole.

In a context where administrative deadlines were suspended for two and a half months, and mobility restrictions were in place with varying degrees of intensity throughout the year, it was decided to prioritise those actions that were more advanced at the beginning of the pandemic, such as actions on large companies, and also those that did not require the presence of taxpayers or advisers. Thus, 14,845 information analysis actions were carried out (+29%) and 51,646 in the 'other control actions' section (+14%).

On the other hand, due to their very nature, it was necessary to defer to 2021 many of the actions requiring physical presence. Thus, 27,921 formal checks were carried out (-68%), including those derived from visit plans, which fell by 52.7%. Those actions that could be continued in the following year without deadline problems were also deferred, which explains the decrease in the number of asset and company analysis actions (2,098); -14%), concealment of activity and abuse of corporate forms (4,346; -17%) or control of economic activities (533,788; -2.7%).

Overall, the Agency carried out more than 1,626,000 internal tax control actions in 2020 –a decrease of 2.3%– despite the fact that the suspension period for deadlines alone, without taking into account subsequent mobility restrictions, accounted for 21% of the total number of days in the year.

Of this total, 29,567 actions, practically the same as the previous year, were directed at large companies, large estates of individuals, corporate abuses and the underground economy, consuming a large amount of resources, characterised, moreover, by their high level of qualification.

In overall collection terms, and as a result of its work in the prevention and fight against fraud, in 2020 the Agency obtained results of €17.274 million, although, given that they include cases of reduction of installed payments for an amount of €4.487 billion that would be difficult to repeat in other years, it is considered more homogeneous, for comparison purposes, to deduct the figure from the total, which would be €12.787.

Control of large estates and false non-residents

The control carried out in relation to individuals holding large estates of individuals led last year, despite the difficulties arising from the health situation, to settle debts of €437 million for this profile of taxpayer, which represents a decrease of 28% compared to the previous year, but an increase of 25% compared to the figures of two years ago. Thus, since 2018 –the year the Central Unit for the Coordination of the Control of Relevant Assets was created– until now, almost €1.4 billion have been settled in a total of 2,100 files.

Along with its support for the large fortune settlements implemented by the different territorial areas of the Agency's inspection control, the Unit has promoted the new tool based on 'big data' analysis for the detection of false non-residents with significant wealth, on the basis of which verification actions were initiated last year on 126 taxpayers.

Similarly, it continues to make progress in other projects already underway, such as the automated identification of users of high-value homes in Spain formally in the hands of foreign companies, or the catalogue of more than 570 suppliers of luxury goods and services whose analysis can lead to the uncovering of tax irregularities of large fortunes and assets directly hidden behind special purpose vehicles.

Combating the underground economy

Within the framework of the fight against undeclared activity, and despite the difficulties in initiating proceedings due to the health situation, last year 2,157 inspections were carried out in which the existence of hidden sales was revealed, with settled amounts amounting to €521 million.

At the same time, amounts and penalties amounting to €332 were settled, 10% more than in the previous year, based on actions carried out in previous years with the participation of the IT Audit Units. Over the past five years, these actions have led to the regularisation of €1.6 billion in more than 22,100 proceedings.

Another important chapter in the fight against undeclared activity is the control of black market rents, where the induced effect of sending tax data notices to alleged landlords during the last IRPF campaigns continues to stand out. In five years, these notices have generated an increase of more than 252,000 taxpayers, with a higher declared tax base of more than 3,000 million euros.

Detection of false invoices

Last year, the Tax Agency's IT Department completed the development phase of a new project to detect irregular invoicing, and its results have already been made available to the Inspection Department this year for future control actions.

Using tools based on artificial intelligence, and based on the experience of previous inspections, the project generates predictive models to facilitate the detection of issuers and recipients of irregular invoices by those responsible for risk selection bodies, thus reinforcing the fight against fraud in this area and also the fight against unfair competition.

Information from abroad

The control of taxpayers for whom information on foreign financial accounts has been received through the European 'DAC2' directive, the OECD's CRS standard and the 'Fatca' agreement with the USA has allowed more than €630 million to be settled in four years for almost 1,900 taxpayers, with €195 million for almost 700 taxpayers corresponding to 2020.

At the same time, last year these inspection actions continued to be complemented with extensive controls on income reported through a previous European directive, the so-called 'DAC1', information that the Agency has also been using to encourage compliance in the voluntary period of personal income tax declarations through the 'warnings' in tax data.

In this other phase, the management verification phase, the actions carried out have generated settlements from the Tax Agency and extemporaneous returns from taxpayers for a combined amount of €46 million through almost 15,000 files, meaning that the accumulated figures for the 2019-2020 biennium in which this information has been used extensively now total more than €100 million and 41,000 files.

Also with a view to uncovering funds hidden abroad, settlements have continued on the basis of information gathered by the National Fraud Investigation Office on the use of cards issued abroad ('offshore cards'). This information has enabled the Agency's various territorial units to settle debts amounting to €37 million in 2020 and a total of €133 million since 2018. In addition, last year 40 taxpayers were registered with offshore cards, which will provide additional results in the future.

Actions on e-commerce

Another important task in the field of tax prevention and control is the correct identification for tax purposes of foreign taxpayers who generate taxable activity in Spain.

In this area, an identification process that has already led to the registration of 7,700 foreign traders (the vast majority of them companies) selling through online platforms has already gained results in 2020. As a result of this campaign, taxable VAT bases amounting to €400 million have been regularised. The Tax Agency hopes to extend the open cooperative relationship in this field with e-commerce platforms.

Collection control

In the area of tax collection, the most qualified actions have continued to be promoted in order to achieve the effective collection of tax debts. Particularly noteworthy is the 39% increase in the number of legal actions (579) brought by the Agency in 2020 to obtain payment of debts. These are actions, particularly criminal actions, which aim to prosecute the demand for recovery in particularly serious situations of apparent insolvency, fraud and, in general, complex concealment practices.

At the same time, 26,746 liability referrals were made to third parties –a 13.6% increase– 665 proceedings were processed to prohibit the disposal of property belonging to companies whose shares or stocks have been mainly seized because they belong to a debtor (8.8% more), and 72,495 proceedings were also processed (34% more) to investigate the assets of debtors who may be using various fraudulent schemes, such as setting up companies or the use of front men.

Furthermore, during the past year, the usual tasks of controlling special and environmental taxes, customs control and matters relating to smuggling, drug trafficking, money laundering and other economic crimes were also carried out. At the same time, the usual activity of collaboration with the justice system and with other administrations at the national and international level has been maintained, and fraud prevention has been promoted through information and assistance tools and cooperative forums in which the Tax Agency participates.