Annual balance of the results of tax inspections
2 July 2020- The Tax Agency has significantly increased the result of its actions to control the large assets of individuals in 2019, meaning that last year it managed to settle debt for an amount of 608 million euros, 75% more than the previous year, also increasing (+78%) the number of files completed (880). This also means that in two years there has been a 156% accumulated increase in files closed on this group of large fortunes.
The evolution of voluntary compliance by the wealthiest taxpayers also shows a strong induced effect of control actions, given that in 2019 their taxable bases in personal income tax have grown by 16% year-on-year and their fees by 13%.
Increasing number of inspections
These results are part of a new model for measuring the verification activity carried out by the Agency, a model which, for the last two years, has overcome the traditional division between intensive and extensive control in order to place the analysis within the scope of the type of the actions, thus giving priority to the selection of tax risks and the use of one procedure or another (intensive or extensive) according to efficiency criteria.
In its second year, therefore, this new measurement model already allows for year-on-year comparisons for each of the new action items.Overall, the Agency carried out more than 1,664,000 control actions on internal taxes in 2019, 5.6% more than the previous year, of which more than 1,613,000 (+5.3%) were verification actions and more than 51,000 were investigative and auxiliary actions (14.6% more).
Of this overall number of checks, 29,631 nominal actions (+7.3%) were directed at large companies, individuals’ assets, corporate abuse and the underground economy. This type of action consumes a high number of resources, which are also characterised by their high level of qualification.
Specifically, the Agency carried out 20,144 actions on large companies, multinationals and tax groups (8.6% more), 2,447 checks on asset and company analysis (+1.2%) and 5,241 checks on concealment of activity and abuse of company forms (4.7% more).
The figure of 29,631 checks is completed by 1,799 actions (9% more) that have led to an upsurge in hidden sales in the framework of the control of economic activities.These 1,799 actions are in addition to those that have also led to an upsurge in sales, but which are already included in the previous sections on asset and company analysis, and on concealment of activity and abuse of company forms.
In terms of overall revenue, and as a result of its work in preventing and fighting fraud, in 2019 the Agency obtained 15,715 million euros, 4.1% more than the previous year.
The Tax Agency also made reductions in tax loss carryforwards, in deductions in taxable income pending application and in tax payments to be offset, with an effect in terms of an increase in tax payments of almost 7,200 million euros, 118% more than the previous year and 95% more than the average for the three previous years.Of this total of almost 7,200 million, 73% corresponds to actions by the Central Delegation of Large Taxpayers.
These are very important actions which, although they do not count in the control results, as they do not imply income or a reduction in refunds, are of great importance in widening future tax bases and increasing tax collection.Precisely this year, and in accordance with the guidelines of the Annual Tax Control Plan, this aspect of tax control will be boosted by the implementation of a special plan that will add to the usual actions a greater emphasis on the review of tax losses pending application by companies in future years.
Catalogue of 570 high-fortune suppliers
In parallel to the increase in settlements on large fortunes implemented by the different territorial areas of the Agency’s inspection control, in its first full year of operation, the new Central Coordination Unit for the Control of Relevant Assets is developing a series of projects to further strengthen and update the control systems on the group.
An example of this is the creation of a catalogue of more than 570 suppliers of luxury goods and services that the Unit has considered can be associated with taxpayers with very high economic capacity (private clubs;high net worth investment managers;jewellery stores, art galleries and auction houses;leisure centres, etc.).
From the analysis of these suppliers, the Unit obtains information that is proving very useful for detecting the direct recipients of these luxury goods and services and, once detected, fiscal irregularities of great fortunes and also assets directly hidden behind holding companies, for the purpose of both regularising defaults and ensuring the collection of debts by the Collection Area.
Control from foreign account information
In recent years, the various tax administrations have seen their capacity to act on undeclared income strengthened by successive European directives on the automatic exchange of information (‘CAD’), standardised mechanisms at the OECD level and other agreements.
After the necessary work of purification and consolidation of information, the Tax Agency can begin to provide quantitative results of the subsequent control work.
In this sense, the inspection control on taxpayers who have received information on financial accounts abroad through the European directive ‘DAC2’, the standard CRS of the OECD and the ‘Fatca’ agreement with the US has allowed more than 435 million euros to be settled in three years with 1,200 taxpayers, of which 293 million were from 2019.
In addition, last year extensive controls on income reported through a previous European directive, the so-called ‘DAC1’, were carried out. These involve information that the Agency had been using until now especially to promote compliance in voluntary period of income tax return through the ‘warnings’ in tax data.
In this other phase, concerning the management verification, the actions carried out have generated settlements by the Agency and untimely declarations by taxpayers for a joint amount of more than 55 million euros through more than 26,000 files.
On the other hand, the information collected by the National Fraud Investigation Office on the use of cards issued abroad (‘offshore cards’) has enabled the various territorial units of the Agency to settle debt amounting to 58 million euros in 2019 and a total of 79 million euros since 2018.In addition, last year 57 taxpayers were registered with offshore cards, which will provide additional results in the future.
The most relevant actions again this year include those carried out in the field of international taxation, and especially those supported by the National Office of International Taxation.In 2019, the ONFI participated in 76 completed inspection missions, which resulted in tax base adjustments estimated at 1,840 million euros.
In turn, the ONFI has participated in the management of 25 Preliminary Valuation Agreements (PVAs) with an estimated result of guaranteeing future taxable bases for an amount of more than 2,100 million euros.
Combating the underground economy
At the same time, the Agency has continued to maintain intense control activity in order to bring hidden economic activity to the surface.In 2019, it carried out 2,927 inspections under various verification programmes (the above-mentioned 1,799 in the area of control of economic activities and the rest in other programmes) in which it discovered hidden sales, regularising rates for an amount of 674 million euros.
In this fight against the underground economy, the IT Audit Units (IAU) continue to play an essential role. In 2019, they participated in 2,181 entries and registrations (13.9% more), with IT dumps that facilitate the discovery of hidden income, improve the collection of evidence and reduce the duration of checks.These actions resulted in 2019 in the regularisation of fees and penalties amounting to 302 million euros through 5,466 inspection reports to taxpayers who had previously been the subject of interventions with the IAUs.
This activity affects atomised actions throughout the national territory, including those carried out within the large macro-operations coordinated with entries and records that have been developed for the discovery of hidden economic activity and the detection of sales concealment software in specific sectors of activity.
As a result of these macro-operations carried out in recent years, in 2019 the Agency settled tax assessments amounting to 76 million euros, raising the overall balance of this type of action to 267 million euros settled through more than 1,200 files from the Inspection Area.
All these inspection activities in the field of combating the black economy are supplemented by the visit plan.In 2019, the Agency carried out more than 30,700 on-site actions (‘searches’) aimed at on-the-spot control in sectors and areas of fiscal risk.These actions included more than 1,100 complementary visits to the sectorial macro-operations of entry and registration, 22.8% more than the previous year.
However, the programme with the highest number of visits, more than half of the total, is still the VAT Visits Plan (more than 15,500 files, similar to the previous year’s figure), which has resulted in a positive outcome of more than 60%, up to 104 million euros, in the VAT revenue of the companies affected by the visits in the period between the start of the 2019 plan and the end of the year, compared to the same period in 2016 (the year before the first ‘VAT Plan’).
These analyses allow us to appreciate the induced effect of these actions from a more global perspective, given that these taxpayers have been aware since then of the Agency’s interest in strengthening this area of tax control.
Outcrop of submerged rents
Another chapter of special relevance in the field of the fight against undeclared activity is the control of submerged rentals, where the induced effect of sending notices of tax data to alleged landlords during the last Income Tax campaigns continues to be highlighted.
In four years, these notices have generated an increase of more than 228,000 filers (40% of the total increase in property income filers in the period), with a higher declared tax base of more than 2,600 million euros (which would explain 47% of the total increase in property income for the period).
Results of the Collection Area
Within the area of Collection, we have continued to promote the most qualified actions to achieve the effective collection of tax debts.In this regard, 23,552 referrals were made, more than double the previous year.At the same time, the amount of principal debtors’ debts owed to third parties has also doubled, reaching 2.28 billion euros.
In turn, in 2019, 611 (74% more) files were processed to prohibit the disposal of real estate belonging to companies whose shares or holdings have been seized because they belong to a debtor, and 1,614 requests for information or seizures were made to foreign authorities for the collection of debts, 78% more than in 2018.
On the other hand, during the past year, the usual tasks of control of excise and environmental taxes, customs control and control of 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 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.