Declaration of Assets Abroad Leads to Fiscal Fraud Investigations

• Asset abroad declarations for 2014 must be submitted by 31 March
• Hacienda has used information collected to investigate and prosecute against tax fraud offences
• Tax havens are no longer safe, and neither are safes!

For many of Spain’s fiscal residents, making a declaration informing the tax office of their assets (valued at 50,000 euro or more) abroad for the Model 720 was carried out this year. That means that they will not be required to make another declaration for a second year, that is unless their asset(s) increases in wealth or profit by 20,000 euro.

For this year’s exercise, declarations had to be submitted by 31 April. To make a declaration for the coming year, fiscal residents have until 31 March.

Government statistics revealed that a total of 131,411 asset declarations were submitted this year, the majority by private individuals – all declaring some type of asset held abroad worth more than 50,000 euro.

From this exercise, a total of 87,698 million euro worth of assets was declared.

Tax officials have praised the quality of information obtained through the Model 720.

From the 87,698 million euro declared in assets abroad, the following was uncovered:

• 44,817 million euro of stocks and shares
• 14,565 million euro of bank accounts
• 16,943 million euro of shares in large institutions
• 8,974 million euro of property

Hacienda, Spain’s tax office, has also come across debit and credit cards emitted abroad but which are used to make payments in Spain.

Hacienda inspectors have warned that 50% of taxpayers that are being investigated by ONIF (National Office of Fraud Investigation) are at risk of committing fraud, whether knowingly or unknowingly.

Offences include:

• Not declaring assets owned abroad
• Companies with offices everywhere but that in all actuality should pay tax in Spain
• Paying a lesser amount of tax than should be obliged to pay
• Companies that don’t declare all work carried out
• Companies that deduct false expenses
• Bank deposits that are completely unrelated to earnings declared
• Bank accounts not declared in the 720 Model (over 50,000 euro)
• Undeclared properties with a high catastral value used by tax residents, but which are the property of entities with accounts in a tax haven
• Accepting more than 2,500 in cash for payments of goods or services, or making these payments

Measures are being taken to stop this kind of fraud, and although Hacienda claimed that the 720 Model would be a purely informative exercise; it isn’t.

Last month, Hacienda officials stormed numerous branches of several banks and demanded to remove a total of 542 safes belonging to taxpayers with huge unpaid tax bills.

The fraudsters have been alerted and asked to settle their tax bill otherwise the safety deposit box belonging to them will be opened by tax office officials. The contents of the safes could open up a whole new case of tax dodging to be investigated, and if fraud has been committed, a prison sentence could even be sanctioned (if the fraud is over 120,000 euro).

Source: www.eleconomista.es