The Tax Agency will have access to the notaries’ database on real ownership of companies to strengthen the fight against fraud

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Agreement between the Tax Agency and the General Council of Notaries

  • The information will be updated monthly and will be very useful in the fight against tax fraud generated by the creation of opaque corporate structures
  • The apparent lack of a relationship between these types of companies facilitates the creation of false invoicing or operational networks such as the illegal placement of income in entities without effective taxation, obtaining improper returns or the hoarding of assets
  • In turn, it was agreed that the Agency would have access to the Single Computerised Notarial Index, which will provide information of great relevance for tax control, such as the identification of the persons who, in the presence of a notary, grant and receive powers of attorney, as well as the dates of appointment and revocation of such powers of attorney 

5 February 2020- The Tax Agency and the General Council of Notaries have signed an agreement under which the Agency will be able to access the information contained in the Notaries’ Database of Real Ownership – information that will be very useful in the fight against tax fraud in relation to the creation of opaque corporate structures for fraudulent purposes.

Similarly, the Agency may also have a periodic supply of information on certain operations or groups of operations contained in the Single Computerised Notarial Index, as well as direct and individualised electronic access to the Single Index, and the possibility of making specific requests for information from Notaries is also regulated.

The agreement between the two parties represents a strengthening of the collaboration that the Agency and the Notary’s Office have been maintaining on the basis of previous agreements, as well as a significant improvement in obtaining information for the fight against fraud, thus offering benefits that will benefit society as a whole.

The Real Ownership Database

The Agency’s systematic access to information from notaries on the actual ownership of legal persons will make it possible for greater control to be had over the corporate structures of supposedly independent entities.

The apparent lack of connection between these types of companies makes it easier for those who control them to create false invoicing networks or fraudulent operations such as reciprocal invoicing to eliminate profits from the group, the illicit displacement of income to entities that are not effectively taxed, obtaining improper returns or the hoarding of goods.

The agreement also provides that both parties will agree on the manner in which the Agency will be able to obtain, to the extent of the information in the database, the sequence of entities through which a natural person is the legal holder of a share or holdings, as well as the actual percentage of its holding (depending on the successive percentages of indirect holdings).

The mechanism for providing information should provide for both ‘bottom-up’ consultations (from a company, to know its owners, natural persons), and vice versa (‘top-down’ consultations).

The information in the Real Ownership Database, which the Agency considers to be of high quality and useful for the repression of tax fraud, will be available to it within two months and will be updated on a monthly basis.

Single Notarial Index Information

At the same time, the agreement provides for the supply to the Agency of activity and transactions contained in the Single Computerised Notarial Index, which will be supplied by computer or electronic means, with fortnightly updates of the information.

In this case, it is particularly important for the Agency to obtain information on activity and transactions in which a legal person or trust is involved, given the frequency with which corporate transactions are carried out with the sole purpose of creating networks of opacity that allow fraud activities to be carried out.The analysis of the information contained in the index will facilitate the Agency the study of complex corporate structures through ‘Big Data’ technology.

In addition, through the Single Index, the Agency will have a periodic supply of the identification data of proxies (the persons who grant a power of attorney to a third party to act on their behalf), attorneys-in-fact and directors of companies, as well as the dates of appointment and revocation of such powers. 

Similarly, access to the index will allow the Agency to obtain information of interest for tax control on financing transactions, real estate, with financial assets and with other securities, and also on transactions in which the participants in the presence of the notary have refused to identify the means of payment used, or have not fully accredited them, or the cases in which they have failed to provide the notary with the Tax Identification Number, or ‘S-1’ document on cash movements when applicable.

Agreement to facilitate the procedures for notaries

In addition, the General Council of Notaries and the Tax Agency have also signed an agreement establishing a general framework for collaboration on the terms and conditions under which notaries may carry out actions with the Agency on behalf of taxable persons who have intervened in their notary’s office.

Thus, it is made easier for notaries to file census declarations that will enable them to obtain NIFs in certain cases, as well as to file tax returns in the area of Inheritance and Donations Tax when taxpayers are required to pay taxes to the State.