surcharges and penalties in tax law spanish report … report spain.pdf · “surcharges and...

EATLP Congress 2015

“Surcharges and Penalties in Tax Law"

Spanish Report

Antonio López Díaz.

University of Santiago de Compostela. (USC)

Santiago de Compostela. SPAIN

“Surcharges and Penalties in Tax Law” ‒ EATLP 2015 2

TABLE OF CONTENTS1

Introductory explanation

1 Taxpayer and Third Party Duties

1.1 Tax Assessment Procedures

1.2 General Duties within Tax Assessment Procedures

1.3 Duties regarding Clarification, Examination and Supervision Procedures

1.4 Duties regarding Tax Collection

1.5 Duties regarding Tax Shelter or Tax Schemes

2 Definition and Categorisation of different Types of Surcharges

2.1 Criminal Penalties

2.2 Administrative Tax Penalties

2.3 Interest

2.4 Other Surcharges

3 Catalogue of Attributes of different Surcharges

3.1 Purpose/Aim/Justification

3.2 Prerequisites

3.3 Timely appliance of the surcharge

3.4 Amount of the surcharge

3.5 Maximum limit

3.6 Dependency on fault or not

3.7 Exemptions from surcharges

3.8 Who imposes surcharges/penalties

3.9 Procedures regarding the imposition of administrative and criminal penalties

4 Surcharges regarding Third Parties

5 Legal Protection of the Taxpayer or Third Parties

5.1 Recourse to legal actions

5.2 Which authority or institution has to be addressed by the taxpayer/third party if he/she wants to file an objection

5.3 Interim measures regarding legal protection

5.4 Protection through advance ruling

5.5 Alternative dispute resolutions regarding surcharges

5.6 Other tax law safeguards

1 I want to express my gratitude to Prof. Dr. Carlos Palao Taboada, emeritus professor at the Autonomous

University of Madrid and prominent specialist in tax infringements and penalties, for sharing the groundwork of

this report.


6 Deductibility of surcharges

7 Numbers

8 Effectiveness

9 BIBLIOGRAPHY


Introductory explanation

By examining the Spanish system of surcharges and penalties on taxation, it is necessary

to distinguish administrative penalties from criminal punishment. This distinction is necessary

concerning both regulatory frameworks and the procedures for application, despite sharing cer-

tain general principles.

The general scheme of administrative penalties and surcharges is generally contained in

the General Tax Act / Act 58/2003 (GTA). Under Article 1.1 "this Act sets up the general legal

principles and rules of Spanish tax system and shall apply to all tax Administrations under and

to the extent that results from 149.1.1ª, 8ª, 14ª y 18ª of the Spanish Constitution”.

On the basis of this article, the territorial jurisdiction and the scope of this general regula-

tion will be scrutinized in this report.

Concerning jurisdiction is up to the central government or local authorities to ensure the

GTA enforcement. However, the autonomous communities (AACC) enforcement of GTA is

subject to specific regulations which need to be cleared up as follows:

a) Those autonomous communities benefiting from a special regime (Basque Country

and Navarre), must enact a specific legislation to be adapted to the GTA regarding both termi-

nology and concepts, with special features already contained in the their own regulation (the

Basque Country Economic Agreement or the Navarrese Agreement).

b) With regard to the CCAA of common system the State taxes assigned to them are en-

coded in the general scheme. The enforcement of the GTA is not directly applicable to the taxes

raised by the AACC. Even though it is not so clear whether the autonomous communities may

enforce the taxes they raise or not. It is worth mentioning Constitutional Court decisions on the

general penalty regime (CCJ? 87/1985), which states that "the Community may adopt punitive

administrative action, provided that it has jurisdiction over the substantive matters concerned, —

referring to the taxes they raise— if such provisions provide constitutional guarantees in n es-

sence art. 25.1 SC) and do not introduce unreasonable or disproportionate discrepancies to the

aim pursued in respect of the scheme which is enforceable in other parts of the Spanish territory.

Should both these requirements be performed they may be allowed to modulate the disciplinary

regime of their own taxes.

Despite this objective of general regulation, smuggling offenses or matters relating to

real estate registration are governed by specific rules.


In addition, tax crimes and their punishment are regulated in the Penal Code (Organic

Act 10/1995 of November 23) which is directly enforceable. Under Title XIV, “Of crimes

against the Treasury and against Social Security”, articles 305, 305b, 306, 310 and 310 contain

the definition of tax crimes and crimes related to breach of other duties.

This regime of criminal and administrative penalties will refer to the breach of duties im-

posed by the rules, with regard to both taxpayers and third parties in order to get the ap-propriate

statement, settlement and tax payment.

1 Taxpayer and Third Party Duties

As stated under article 17 of the GTA, the tax legal relationship covers all obligations

and duties, rights and powers arising from the application of taxes.

In this context, from the tax relationship can be derived material and formal obligations

to the taxpayer and the administration as well as the imposition of tax penalties for noncompli-

ance.

From a material point of view, the charges that may be imposed as a result of delays or

defaults would be integrated into the material tax liabilities, while the sanctions themselves fall

outside that category due to the distinction between punishment and tribute.

On the other hand, the consideration of formal tax obligations applies to those which,

without pecuniary component, are imposed by the tax and Customs legislation to taxpayers, tax

debtors and whose performance is linked to the development of actions or tax or Customs pro-

ceedings. It is worth noting that such duties can affect both taxpayers and third parties not liable

for the tax.

In general, and without prejudice to other specific than can be contained in special legis-

lation, these obligations appear systematized in article 29 of the GTA as follows:

a) The obligation to submit tax register declaration for registration by persons or entities

that develop or will be developed develop professional activities or business operations or meet

income subject to withholding tax in Spanish territory.

b) The obligation to apply for and use the tax identification number on their relationships

with fiscal significance.

c) The obligation to submit statements, self-settlements and communications.


d) The requirement to keep and maintain books and records, as well as programs, files

and computer files that supporting them and coding systems used to enable the interpretation of

the data when the obligation is fulfilled with use of electronic devices. It should facilitate the

conversion of these data to readable format when reading or interpretation same as not possible

to be encrypted or encoded. In any case, taxpayers required to submit self-settlements or state-

ments by electronic means shall keep copies of the programs, files and generated files contain-

ing the original of the financial statements and self-settlements or statements submitted data.

e) The obligation to issue and deliver invoices or equivalent documents and keep in-

voices, documents and evidence relevant to their tax obligations.

f) The obligation to provide to the tax authorities books, records, documents or informa-

tion that the taxpayer is required to maintain in relation to the performance of tax obligations

themselves or others, and any data, reports, background and taxation-proof at the request of the

Administration or on periodic statements. Where the required information is kept in digital for-

mat should be provided on said support so when this is required.

g) The obligation to provide the practice of administrative checking and inspections.

h) The obligation to submit a certificate of withholding or income account charged tax-

payers recipients of income subject to withholding or payment on account.

i) The obligations of this nature established by the Customs legislation.

Although most of these obligations affect taxpayers, there are also important duties im-

posed on others. Most of them have to do with the duty to provide relevant fiscal information to

the tax administration, both for settlement and for the investigation and quantification of the

material obligations of the various obligors.

In this sense, obligations affecting financial institutions and insurance companies deserve

special mention, given the importance of the data that they can provide for proper quantification

and collection of tax obligations.

1.1 Tax Assessment Procedures

In Spain, as regards quantification and settlement of taxes, two systems coexist currently:

the settlement system by the government and the self-assessment mechanisms, albeit with a

clear preponderance of the latter. The vast majority of the taxes, especially on the state and re-

gional level, provide self-assessment systems by the taxpayer. Furthermore, they are still exam-

ples of taxes that are liquidated by the Administration, especially at the local level. Even in these


cases of administrative assessment, the system usually imposes the duty of the taxpayer to sub-

mit the relevant declaration that will start the procedure of liquidation.

Finally, it is also worth mentioning the existence of certain periodic taxes in which, after

an initial declaration of registration by the taxpayer, it is the administration that comes to au-

thentic automatic payments, including debts of each contributor in a general list (register, regis-

tration, census ..) through which they come to their collection.

In the Spanish tax system, self-assessment is absolutely predominant. Self-assessment

implies that the taxpayer is not only obliged to file his tax return but must also to determine the

amount due. Exceptions are irrelevant concerning certain local taxes. Administrative assessment

only takes place in general as an outcome of a tax control, mostly a tax inspection.

Duties in relation to taxes obviously concern mainly the taxpayer himself, but there are

“third parties” charged with the obligation to pay an amount to the Public Administration or to

fulfil reporting duties or both. One relevant kind of third parties is formed by people who are

liable to pay the tax either jointly with the taxpayer or subsidiarily to him. These people have a

function of guarantee of the tax debt. Normally this liability does not include penalties imposed

on the taxpayer, but it does in some cases, especially when the liable person has collaborated in

the taxpayer’s infringement. In these cases liability is the penalty for the collaboration. Another

important figure is the person who is obliged to withhold an amount from his payments to the

taxpayer and remit it to the Tax Administration. Other “third parties” are simply subject to re-

porting duties concerning another person’s tax. Violation of these duties can constitute a tax

offence. We shall not refer specifically to third parties unless required by the context.

1.2 General Duties within Tax Assessment Procedures

As corresponds to the self-assessment system, the taxpayer has to state the relevant facts

in his tax return and based on them, the amount of tax due is calculated. This computation is

basically a justification of the payment due by the taxpayer, but the self-assessed payment can

be enforced by the Administration.

Together with the payment obligation, the taxpayer has certain documentary and report-

ing duties, which consist in bookkeeping according to commerce law, if he is a merchant; and, if

he is a professional, he must keep certain books established by the Tax Administration. The lat-

ter include a register of sales and receipts, a register of purchases and expenses and a register of

investment assets.


As regards the accounting duties, Article 29 GTA establishes the following duties of the

taxpayer:

"D) The requirement to keep and maintain books and records, as well as programs, files

and computer files supporting them and coding systems used to enable the interpretation of the

data when the obligation is met using systems. It should facilitate the conversion of these data

encrypted or encoded to readable format when their reading or interpretation is not possible.

In any case, taxpayers required to submit self-assessments or statements by electronic

means shall keep copies of the programs, files and generated files containing the original of the

financial statements and self-assessments or statements submitted data. "

Relative to this duty, the following cases should be differentiated:

a) Commercial Accounting: bookkeeping as required to traders in the Commercial Code

and complementary legislation. This is especially relevant with regard to entrepreneurs and pro-

fessionals, both for the purposes of income tax and VAT.

b) Other accounting records: People who have no consideration of traders are required

by tax law –both by general or specific rules of each tribute– to keep documentary recording .

In addition to keeping documentary recording, there is also the obligation to provide to

the tax authorities records, files or information that the taxpayer is required to maintain in rela-

tion to the performance of own tax obligations or of somebody else, and any other relevant data

and taxation evidence, at the request of the Administration or in regular taxpayer’s reports.

Where the required information is kept digitally, this format should be provided when required.

Tax law imposes a vast number of information duties on enterprises or professionals in

general or specific kinds, such as credit entities, security agencies, insurance companies, nota-

ries, etc., concerning transactions with third parties. These duties are fulfilled by means of peri-

odical reports. A new reporting duty was recently added to the list: taxpayers must inform the

Tax Administration about all their bank accounts held abroad as well as all their movable or

immovable assets located in foreign countries. The breach of this duty is punished with severe

penalties.

Besides the periodical reporting duties, the Tax Administration can require form any sin-

gle person, whether an individual or an entity, private or public, to provide “fiscally relevant”

information. Some rights of privacy can be opposed to this requirement, such as those regarding

mail, statistical data, or professional information, etc.


A second set of duties has to do with the process of taxes quantification. In this sense and

as has already been shown, two different systems coexist:

a) The minority settlement system by the Administration. In this case, the taxpayer is

obliged to notify taxable events and other relevant information the Tax Administration to enable

the Administration to proceed with the quantification of tribute and its notification to the tax-

payer.

b) In the most common system of self-assessment taxpayers do not only have to declare

taxable events but they should also proceed to the quantification of the tax and the income from

it. In this case taxpayers’ obligations also include the statement, and therefore, quantification

and payment.

Concerning to quantification, the taxpayer must proceed to the proper application of the

rules and determine the fee due. An incorrect determination of the quota will be considered as an

administrative infringement, and may even be considered a criminal offence, if it exceeds EUR

120,000.

In addition to declaring and quantifying, the taxpayer must pay the amount due within

the time provided by law. It should be noted, however, that the breach of duty to make the corre-

sponding deposit does not constitute an administrative transgression, but it enables Administra-

tion to enforce collection. In this case, although penalties are not imposed, the obligation to face

surcharges of 5%, 10% or 20% of the unpaid debt plus default interest is due.

1.3 Duties regarding Clarification, Examination and Supervision Procedures

The fulfilment of their duties and obligations by the taxpayer or other persons are of

course subject to control by the Tax Administration. The most in-depth control procedure is the

tax inspection. In the course of it, the inspector’s faculties are very ample, and he can examine

all kinds of evidence related to the tax duty, including the accounting records. To entry into the

examined person’s home is forbidden unless judicial authorization is granted. The taxpayer is

obliged to collaborate with the administrative agent; refusal to do so may constitute an offence.

The results of the inspection procedure are set up in a record, which, if pertinent, contains an

assessment proposal. The taxpayer can accept this proposal or dissent from it. In the latter case

an adversarial procedure is opened, which is decided by a superior authority. This administrative

decision paves the way to legal remedies, first administrative and then judicial.


Besides full inspection there are other more simple control procedures. In the first place,

the filed tax returns are routinely checked regarding their formal correctness and coherence and

their conformity with the information possessed by the Administration. The officer in charge

can ask the taxpayer to clarify or justify some elements of the return. There is a more elaborate

form of control called “limited verification”, where the officer has wider faculties, although not

quite as far reaching as those of the inspector in the inspection procedure. Thus he cannot re-

quire the taxpayer to show his accounting books. These procedures may also lead to a provi-

sional administrative assessment.

Regarding the taxpayers duties in the investigation of a crime or (administrative) in-

fringement, some preliminary ideas have to be set forth. In the course of an inspection facts may

come out which might constitute a tax crime or an administrative contravention. In the latter

case, a separate infringement procedure has to be initiated in order to decide about the imposi-

tion of a penalty. When the facts revealed in the inspection procedure can constitute a crime the

situation is more complicated, more so since the applicable rules are presently undergoing a pro-

found change, which is not yet completed. According to the previous regulation, in such cases

the Administration had to stop all action and remit the proceedings to the public prosecutor. If

the court found the taxpayer guilty it not only applied the corresponding penalties but also estab-

lished the amount of tax due as civil liability derived from the crime. In the opposite case, the

Tax Administration resumed the assessment procedure taking into account the facts established

by the court.

This system gave rise to conceptual criticism and also caused serious practical problems.

First of all a considerable delay in the collection of the tax debt owed by the evader was pro-

duced. In view of this, Organic Act 7/2012, of December 27, modified the regulation of the

crime of tax fraud in the Penal Code. The main objective was to allow the Tax Administration to

continue this procedure regardless of the remittance of the proceedings to the judiciary, when

suspicion of crime appears in the assessment procedure. The new regulation orders the Tax Ad-

ministration to issue two separate assessments, one based on the facts that bear no relation to the

presumed fraud and another based on the facts connected to this fraud. The latter assessment is

subject to the court’s decision, to which it will be finally adjusted. The tax debt resulting from

both assessments will also be collected by the Administration, coercively if it comes to it. Ana-

lysts took the opportunity to point out the difficulty and artificiality of the distinction between

facts connected and unconnected to the fraud. The drafting procedural rules are being highly

complex due to this distinction, and raises some doubts as to the success of the new legislation.


From the moment in which the first evidence of fraud appears until the remittance of the

proceedings to the public prosecutor, the activity of the Tax Administration experiences a

change of purpose: it is not merely directed to ascertain the tax debt but also to confirm whether

or not the initial facts involve a firm suspicion of the crime that requires to defer the case to the

judicial authority. In other words, it becomes at least partially a criminal procedure, presided by

the presumption of innocence, in which the taxpayer has consequently the right not to incrimi-

nate himself, contrary to his duty to collaborate with the Administration that exists in the as-

sessment procedure. Normally this change in the frame of this proceeding is not recognized by

Administration. Therefore, some authors have drawn the attention to this situation and the risks

it entails for the taxpayer’s rights. The legislator however has so far ignored it.

1.4 Duties regarding Tax Collection

According to Spanish law, tax collection includes both voluntary and coercive payment

of the tax debt. Voluntary payment must take place in the established term, which in the case of

self-assessment is coincident with the period for filing the tax return. With respect to voluntary

payment, the taxpayer’s duties are those inherent to his position as debtor. At the end of the

payment term, if the Administration knows the details and the amount of the debt, the coercive

collection period begins and the Tax Administration can initiate the enforceable collection of the

tax debt by issuing an order of execution. Upon notice of this order, the taxpayer has the oppor-

tunity of paying the debt within a short term after which the collection bodies will seize his as-

sets. The beginning of the coercive collection period automatically gives rise to a specific kind

of surcharge in the amount of:

a) 5% of the debt if payment takes place before notification of the order of execution;

b) 10% if it takes place after the notification. In both theses cases interest is exclude;

c) And 20% plus interest in all other cases.

Justification of this surcharge is based as a deterrent from late payment and as a compen-

sation for the expenses incurred by the Administration for the coercive collection.

On the other hand, in the cases of self-assessment, if the taxpayer does not fill the tax re-

turn, obviously they cannot pay for it. But in these cases the Tax Administration cannot collect

this debt coercively because it is not known. In this case, it is for the Tax Administration to open

an inspection procedure in order to determine the different aspects of the tax debt and to asset it.

As the lack of self-assessment is considered an administrative contravention, an infraction pro-


cedure could be open to impose a penalty, normally a fine. Furthermore, interest must be col-

lected during the time frame going from the end of the payment term to the notification of the

debt by the Tax Agency.

In order to avoid the penalties, the taxpayer has the chance to file the tax return and to

pay for it at any time before the beginning of the administrative procedure. This spontaneous but

late payment will have as a consequence the imposition of different surcharges whose amount

will depend on the period of delay, that is, 5 % less than three months, 10 % three to six months,

15 % six to twelve months and 20 % if it is more than twelve months. Only in this latter case

interest is also required.

Whereas in voluntary payment the taxpayer plays an active role, in the coercive collec-

tion procedure his position is essentially passive because he has to endure the administrative

action.

Specific duties may affect payers of seized salaries or pensions, persons in possession of

seized assets, such as banks or depositaries, or public registries in which property is recorded,

who in general have to collaborate with the seizure. Failure to do so can constitute an adminis-

trative infringement and entail liability for those in charge for the taxpayer’s debt.

1.5 Duties regarding Tax Shelter or Tax Schemes

Not applicable

2 Definition and Categorisation of different Types of Surcharges

The notion of “surcharge” involves an additional charge or payment”. Therefore, the dis-

tinction between the various types of surcharges to which the questionnaire refers (criminal pen-

alties, administrative tax penalties, interest and other surcharges) lies on the character of the

action imposing the surcharge, particularly “crimes” and “administrative infringements”. “Inter-

est” is clear enough. “Other surcharges” must be defined according to the facts that originate

them. Besides, emphasizing its effects instead of its cause (the crime or the infringement) those

crimes or infringements that are not punished with a pecuniary penalty would be excluded. In

fact, in most countries criminal tax fraud is punished with prison together with a fine. In view of

these considerations, under the headings of “criminal penalties” and “administrative tax penal-

ties” we shall refer to the action that causes the penalty.


2.1 Criminal Penalties

The most serious violations of tax law are considered by the legislator as a criminal of-

fence. In Spanish law these offences are typified in the Criminal Code. There are two kinds of

tax crimes: tax fraud and tax accounting crime. The latter, the details of which can be omitted

here, consists of severe infringements of the bookkeeping duty, and is punished with prison be-

tween five and seven months.

The most frequent tax crime is tax fraud. It is committed by anyone who defrauds the fi-

nance of the state, the autonomous communities or the local entities, by paying not taxes or

withheld sums or obtaining unlawful refund of taxes or by enjoying fiscal benefits, provided that

the amount of the avoided tax, the unpaid withheld sums, or the obtained refunds or benefits

exceeds the amount of 120.000 euro, unless the fiscal situation is clarified. For this clarification

to be satisfactory the taxpayer must declare and pay the tax debt in full before he is notified by

the Tax Administration of any action leading to the verification or investigation of the debt or,

failing that, previous to the public prosecutor or creditor public entity have filed lawsuit or in-

dictment against the taxpayer, or earlier than the public prosecutor or the judge have formally

initiated proceedings. The above definition of tax fraud was set up by Organic Act 7/2012. In

accordance whit it, failing the settlement of the debt, so defined, is an element of the legal defi-

nition of tax fraud. Tax fraud is punished with prison from one to five years and a fine from one

to six fold the defrauded sum.

The Organic Act 7/2012 also has introduced an aggravated type of tax fraud, character-

ized by any of the following circumstances:

a) The defrauded tax exceeds EUR 600.000 euro;

b) The fraud was committed by an organization or criminal group;

c) Or the appointment of nominees, the use of fiduciary transactions or instruments, tax

havens or low taxation jurisdictions hindering the identification of the taxpayer or defrauder, the

determination of the evaded sum or the taxpayer’s or defrauder’s net wealth.

Punishment for this type of tax fraud is imprisonment from two to six years and a fine

from twice to six times the defrauded amount. In addition, whoever is at fault shall be excluded

from grants or public aids and fiscal and Social Security benefits and incentives for a period

from four to eight years.


2.2 Administrative Tax Penalties

The concept of “administrative tax penalties”, that is to say, “administrative contraven-

tions or infringements”, as stated in the questionnaire does not agree with such concept in Span-

ish law. Under Spanish law it is not correct to say that administrative infringements and the cor-

responding penalties have a preventive and not a punitive purpose. The Constitutional Court and

the Supreme Court have established long ago the basic principle that criminal offences and ad-

ministrative contraventions have substantially the same character since they are both manifesta-

tions of a single ius puniendi of the state. Consequently, administrative penalties, just like the

criminal ones, have in Spanish law a repressive and a preventive purpose. This common charac-

ter entails that constitutional principles (such as those of culpability, legality, due process,

among others apply in general to both kinds of offences, although some “nuances” might exist

as required by their different characteristics; On the one hand administrative penalties are ap-

plied by administrative bodies and not by courts. On the other hand, under Article 25.3 of the

Constitution, the civil [as opposed to the military] Administration may not impose penalties that

directly or indirectly imply deprivation of liberty.

The characterization of a reprehensible conduct as a criminal offence or as an adminis-

trative contravention is a political matter that is up to parliament to legislate. However, legisla-

tion should be guided by the criterion that only the most serious conducts should be typified as

crimes and that criminal law is society’s ultima ratio. In fact, transfers of conducts from the ad-

ministrative law to the criminal law field and vice versa are not at all infrequent.

Tax administrative infringements are established for all kinds of state taxes in the GTA,

to which the law on local taxes refers. The laws on the different taxes and other tax legislation

can establish specific penalties. Article 183.1 GTA defines tax contraventions as “those actions

or omissions intentional or negligent in any degree typified and punished as such in this or any

other law”. Contraventions typified in the GTL may be classified into two groups, according to

whether they cause or not an economic damage, actual or potential, to the public finance. The

basic type of the first class is the “failure to pay the amount of tax that results from a correct

(self- or administrative) assessment”. Therefore it is not a penal contravention but a matter of

tax collection not to pay a tax that was correctly self- assessed or truthfully declared to the Ad-

ministration. Contraventions which do not cause an economic damage (“formal” contraven-

tions) include, among other, late payment, incorrect filing of informative reports, infringements

of the duties concerning bookkeeping, issuance of invoices and resistance to inspection.


The general consequence is a fine, but it may be accompanied in certain cases by penal-

ties of different nature, like exclusion from public grants or fiscal benefits, the prohibition of

entering into contracts with the Public Administration and suspension of the practice of certain

professions, such as public notaries. The amount of the fine varies for each contravention ac-

cording to various factors. For contraventions that cause damage the fine is 50% of the evaded

sum if the contravention is qualified as minor, between 50% and 100% if it is qualified as seri-

ous, and between 100% and 150% if it is considered very serious. This qualification takes into

account such factors as the existence of concealment or the use of fraudulent means, as law de-

fines them. Then the penalty is graduated by increasing the minimum rate, that is the percentage

points, for each case, if some circumstances concur, like recurrence of infringement and the im-

portance of the evaded sum compared with the correct tax due. On the other hand, the penalty is

reduced by 30% or 50% respectively, if the taxpayer accepts the inspector’s assessment proposal

or reaches an agreement with him when this is admitted (see infra 5.5).

The ne bis in idem principle is not expressly established in the Spanish Constitution, but

the Constitutional Court considers that it derives from the principle of legality of criminal law

stated in Article 25.1. The Court also invokes the international instruments on human rights, of

which Spain is a signatory, that declare this principle, like the International Covenant on Civil

and Political Rights of 16 December 1966 (Art. 17.7) and Protocol No. 7 to the Convention for

the Protection of Human Rights and Fundamental Freedoms (Art. 4). Article 10.2 of the Spanish

Constitution establishes that “ the principles relating to the fundamental rights and liberties rec-

ognised by the Constitution shall be interpreted in conformity with the Universal Declaration of

Human Rights and the international treaties and agreements thereon ratified by Spain”.

Besides, ne bis in idem is expressly established in ordinary law: Article 133 of Act

30/1992, of November 26, governing the functioning of the Public Administration and the

Common Administrative Procedure, orders that “facts that have been punished under criminal or

administrative law cannot be punished if there exists an identity of subject, fact and foundation”.

Consequently, given this “triple identity” an administrative penalty cannot be simultaneously

imposed with a criminal penalty or with another administrative penalty. The Constitutional

Court considers that this rule, known as the “material aspect” of ne bis in idem, is respected if

the criminal court allows for the deduction of the administrative penalty previously imposed.

The “procedural” or “formal” aspect of the ne bis in idem principle forbids initiating a

new penal procedure based on identical facts and on the same grounds. This rule applies rigor-

ously when both procedures are judged by criminal courts. When an administrative contraven-


tion procedure concurs with a criminal process, bis in idem is eliminated by recognizing the

prevalence of the penal court over the Administration. Therefore, if the Public Administration

has initiated a procedure it must paralyze it if the facts may constitute a criminal offence. This is

expressly ordered by Article 180 GTA, which commands the Tax Administration to forward the

proceedings to the public prosecutor and interrupt not only the contravention but also the as-

sessment procedure. As has been already mentioned, a modification that is now being drafted

foresees the continuation of the assessment and collection procedure, but not the contravention

procedure. If the court finally acquits the accused the Tax Administration may resume the con-

travention procedure based on the facts found by the court.

A question related with ne bis in idem is the concurrence of offences: e.g. when several

actions constitute different offences or when a crime is a means to commit another crime. GTA

establishes some casuistic rules on this matter, which sometimes are completed applying the

Criminal Code rules.

Finally, similarly to tax crimes, the infringer can elude the penalty if he voluntarily clears

up his position with the Tax Administration, that is filing a correct return before receiving notice

of any action leading to the assessment and collection of the debt. Differently from the case of

tax crime, payment of the debt is not required, but will be enforced by the Administration, and

the above-mentioned surcharge (see 1.3) will be applied. Late tax return, however spontaneous,

determines the imposition of a specific surcharge, which will be dealt with bellow.

2.3 Interest

In Spanish law interest in tax matters matches the concept explained in the questionnaire:

it is basically not a sanction but a financial compensation for late payment.

Interest is due whenever the taxpayer has retained a sum that should be in possession of

the Public Finance. This occurs, among other situations, in the following cases:

a) late payment;

b) when the taxpayer has obtained an unlawful refund;

c) when the execution of the assessment resolution has been suspended on the occasion

of an remedy. One notable exception is the remedy against the imposition of a penalty, in which

case the execution is automatically stayed and no interest is applied until it was a firm adminis-

trative resolution. (GTL art. 212);

d) or when payment of the tax has been postponed at the taxpayer’s request.


Tax interest is calculated applying the rate that is in force along the period of computa-

tion, taking into account its eventual changes.

As a protection against administrative delay, the computation of the interest ceases if the

Administration faultily exceeds the legal time limit to approve a resolution or decide an appeal.

The tax interest rate presents a characteristic that distinguishes it from pure interest. In-

terest rate for tax debts is set up every year in the Budget Act together with the legal interest

rate, applicable by default to all kinds of debts, public or private. Article 26.6 GTA establishes

that in case the Budget Act fails to set up the tax interest rate it will be the legal interest rate in-

creased by 25%. But the Budget Law has invariably set up both rates: from 2005 to 2014 the

respective rates have steadily been 4% and 5%, except in 2007 (5% and 6.5%) and 2008 (5.5%

and 7%). The issue of the constitutionality of this increase was brought to the Constitutional

Court on the grounds that it might infringe the equality principle, since interest paid on refunds

paid to the taxpayer by the Administration was at that time the legal interest, and the principle of

legality in penal law, because the additional interest would be a penalty imposed without an of-

fence. The Constitutional Court judgment 76/1990, of April 26, dismissed these allegations and

found that the difference of treatment was not unreasonable, considering the imbalance position

of the taxpayer and the Administration, and that timely payment is of greater importance for the

Administration than for the private person. The Court also found the amount of the increase

proportionate. In the Court’s opinion the penal principle of legality did not come into considera-

tion for the increment was not a penalty, although it admitted that the increment had a deterrent

purpose not just a compensation one. It must be borne in mind that at the time the legal interest

rate was considerably lower than the market rate, so the taxpayers were induced to finance

themselves by delaying the payment of their taxes. Curiously enough years later the inequality

was suppressed by Law 1/1998, of February 26, on Taxpayer’s Rights and Guarantees, which

ordered that interest on refunds paid by the Administration to the taxpayer should bear the same

increased interest as in the opposite case. In this case the justification for the increase alleged by

the Constitutional Court does not hold up.

2.4 Other Surcharges

Other surcharges applicable in Spanish tax law, for which the term “surcharge” (re-

cargo) is reserved, may be classified in two different categories:

a) Surcharges applied in the case of late filing of a self-assessment or tax return before

any administrative requirement (GTA art 27). In this case the surcharge for late filing of self-


assessment or tax return amounts to 5%, 10% or 15% if the delay is less than three, six or twelve

months, respectively. These percentages are applied by the Administration on the amount of tax

assessed either by the taxpayer in his self-assessment or by the same Administration on the basis

of the return. In all these cases the surcharge excludes interest. If the delay exceeds twelve

months the surcharge is 20% and it is compatible with interest computed from the deadline for

the filing until this eventually takes place. These surcharges also exclude the imposition of

penalties related to the late filing, but, as has previously mentioned, only if this observance is

spontaneous and previous to an administrative requirement.

b) Surcharges due once the executive collection period has begun (GTA art 28). These

are applied when the executive collection period has begun in case of tax settled by the Admini-

stration, or, in case of self-assessment, when the taxpayer has self assessed the tax, but has not

paid for it.

The coercive collection period surcharges vary from 5% to 20% depending on the mo-

ment the payment took place. The 5 % and 10% surcharges exclude interest accrued since the

beginning of coercive period if they are determined and paid spontaneously by the taxpayer,

whereas the 20% surcharge is compatible with such interest and the costs of the procedure.

It is important to highlight that surcharges of late self-assessment and those due, once the

executive period has begun, are compatible when the payment is not performed at the same

moment as the late self-assessment is filed.

The problem of characterizing the obligation to pay a sum of money as a penal offence

or otherwise does not arise from specific regulation. At this level, such obligation is a crime or

an administrative contravention or has another character if it fits the respective legal definition.

However, this issue involves also constitutional implications when the legal characterization of

such obligation contrasts with its real function, and accordingly infringing a constitutional norm.

This problem has in fact arisen in Spain concerning certain surcharges imposed on the taxpayer

who files late his tax return, but previous to the Tax Administration has undertaken any action

towards the assessment and collection of the tax. This surcharge has adopted several forms over

time, some of which were submitted to the Constitutional Court. This Court had to decide on the

potential violation of the regular process required under Article 24.2 of the Spanish Constitution,

since these surcharges are imposed automatically without any adversarial procedure. The fun-

damental criterion applied by the Constitutional Court is the purpose of the surcharge, that is,

whether it has a punitive function, - the state’s ius puniendi -, or not (the milestone Court deci-


sion No. 164/1995, of November 13). It also takes into account the amount of the surcharge as a

sign of that potential punitive purpose, depending on whether such amount came close to that of

penalties or not. The Court also held that the fact that the surcharge has a deterrent purpose does

not determine in itself a punitive character. Later on in judgments 276/2000, of November 16,

291/2000, of November 13 and 39/2011, of March 31, the Constitutional Court, restating the

criterion on finality criterion, gave a decisive weight to the amount of the surcharge and invali-

dated a surcharge of 50% of the tax debt.

The principal consequence of considering some surcharges as an administrative penalty

is the need to impose them following an adequate procedure that ensures the typical guarantees

of a penal procedure under the threat of nullity.

In any case, under Article 10.2 GTA, the norms that govern (administrative) tax contra-

ventions, penalties and surcharges shall apply retroactively to administrative resolutions that are

not final if such application is more favourable for the person concerned. This is a traditional

principle of criminal law and its extension to administrative infringements is quite natural, but it

is interesting to note that the cited provision applies it also to surcharges, which points out to a

residual penal character of these payments.

3 Catalogue of Attributes of different Surcharges

Most of the questions posed under this heading have already been answered in the pre-

ceding section 2. Here we shall add some additional comments where appropriate.

3.1 Purpose/Aim/Justification

Concerning the purposes of penalties and surcharges, it is possible to identify three dif-

ferent classes:

a) The punitive function: In this case the amount of the fine, the time of imprisonment, or

other penalties are intended to make the offender assume the consequences of his illegal action.

b) The deterring aim: Further than the punitive effect, there is also a deterring purpose

that is based on the prevention of future behaviours not only by the offender, but also by people

in general.

c) Finally, there is the purpose of compensatory damages caused to the Public Admini-

stration as a consequence of different acts that can be legal or illegal.


Interests focus on the third aim, the compensation of damages caused to the Public Ad-

ministration as consequence of a late payment, not only in the cases of illegal facts, but also

when the creditor conceded an extension of the payment deadline.

Both penal and administrative sanctions have, in general, the two first purposes: punitive

and deterring. This circumstance implies, as a general rule, that penalties must be compatible

with interest in order to repair the damages.

It is more difficult to identify the real purpose of other surcharges, (recargos) because

their real character, as has been explained before, is not clear due to the differences among them.

These differences are related to varied aspects: The facts that motivate the imposition of the sur-

charges; the amount of them; and, finally, their compatibility or not with penalties or interest.

In general, some rules can be formulated as follows:

a) A surcharge has a compensatory function when it is compatible with penalties but in-

compatible with interests.

b) On the contrary, if the surcharge excludes the imposition of penalties, but not the en-

forcement of interest, its aim will be punitive and deterring. In this case its character is close to a

fine.

c) As a third option, if the surcharge excludes both of them, penalties and interest, its

aim, and as a consequence, its character will be determined by the amount, as our Constitutional

Court has held. If the amount is similar to penalties, it will be classified as a fine. However,

when the amount of is lower and closer to the interest rate, the compensatory aim must prevail

and it will be similar to interest.

3.2 Prerequisites

The requirements for each type of surcharge were shown in its respective explanation

(see Chapter 2)

3.3 Timely appliance of the surcharge

The timely appliance for penalties, interest and surcharges varies depending on the cate-

gories involved.

Those sanctioning categories presenting punitive character must follow the legal proce-

dure provided for that purpose, whether judicial or administrative. In the case of criminal pro-

ceedings there is no maximum period for sanctioning. However, administrative sanctioning pro-


ceedings must be initiated within a maximum period of three months from the completion of the

verification procedure from which the punishable acts arise. This procedure is subject to a

maximum period of six months. Then a sanction is only effective after completion of the proce-

dure, but it is not enforceable until the decision is final in administrative proceedings (see 5.3).

Interest and surcharges will be required through an administrative settlement whose noti-

fication initiates the voluntary period for payment. However, as an exception, a surcharge of 5%

of the unpaid bill shall be imposed in the executive period and a surcharge of 10% in the coer-

cive collection period. The settlement must be self-assessed and paid by the taxpayer to avoid

the enforcement of the general surcharge of 20 %.

3.4 Amount of the surcharge

In general, the amount of pecuniary penalties for administrative infringements and tax

crimes is computed on the basis of evaded tax. In the case of tax fraud, the computation of the

EUR 120,000 threshold is governed by the following basic rules:

- If the defrauded tax has a taxable/assessment period of one year, each period is consid-

ered separately.

- If the assessment period is shorter than a year –which is notably the case of VAT,

which is assessed quarterly or monthly—what shall be taken into account is the amount evaded

in the natural year.

- For taxes that do not have a tax/assessment period, each tax that is assessed separately

is considered independently.

In the case of tax crimes, the penalties designed in the Penal Code (art. 305) are:

a) 1-6 years of imprisonment;

b) a fine from 100 % to 600 % of the tax evaded;

c) and, in addition the offender should not receive public grants and he will be deprived

of tax deductions during a period from three to six years.

For administrative infringements the penalties established in the GTA are fines. The

most common fines consist of a percentage of the tax evaded that varies from 50% to 150 %

according to the severity of the offence. In some cases other penalties are applied, such as the

prohibition of the exercise of some activities or other tax benefits.


In case of formal infringements without tax evasion the fines for the different offences

have a fixed amount between EUR 150 and 600,000, depending on the importance and the ef-

fects of the violation.

The surcharges are also defined in a percentage of the tax debt. Pursuant to the judge-

ments of the Constitutional Court that annulled those surcharges whose amount were similar to

sanctions (50 %). Nowadays the amount of surcharges fluctuates from 5% to 20 % depending

on the delay of payment. For long delays, more than a year, the 20% surcharge is compatible

with the interests.

Finally, as has been was explained, the interest rate is fixed every year by the annual

budget Act. For 2014 the rate is 5 %.

3.5 Maximum limit

For the imprisonment penalty there is not a specific limit for tax crimes apart from the

common maximum limit of 20 years. There are other higher limits in specific cases, which do

not include tax fraud.

In case of monetary fines there is not a maximum limit.

3.6 Dependency on fault or not

As mentioned before, the principle of culpability derived from human dignity recognized

in the Constitution applies generally to all kinds of penal infringements, whether criminal or

administrative, but with different severity. Tax penal offence is an intentional crime: according

to the prevailing opinion, the concept of fraud implies deceiving the Tax Administration. Con-

sequently, it cannot be recklessly committed. This has important consequences, for instance,

regarding the effect of error about applicable tax law.

On the other hand, administrative contraventions can be imprudently committed. Ac-

cording to the GTA “any degree of negligence” satisfies the culpability requirement, however

the penalty cannot be imposed if it is completely absent. This is the case when the taxpayer has

observed due diligence in fulfilling his tax obligations. This is assumed when he has acted on

the basis of a reasonable interpretation of the law or following the Administration’s published

criteria. Liability is also excluded when the infringement is caused by a technical defect of soft-

ware for the assessment of taxes provided by the Tax Administration (Art. 179.2,e GTA).

On the contrary, surcharges and interest are not depending on fault because, in general

terms, they are not authentic penalties. So the procedure to impose them takes only into account


the facts, regardless the offender’s fault or not. Only when an apparent surcharge could have a

real character of penalty, the fault of the agent must be considered. The imposition of one of

these surcharges without considering the culpability will be cause of nullity as a violation of the

constitutional principal.

3.7 Exemptions from surcharges

No current exemptions stricto sensu exist for surcharges (in the broad sense used in the

questionnaire). Reasonable justification of the non-compliance or acting in good faith is equiva-

lent to lack of culpability (see 3.6). Voluntary settlement of the pending debt (see points 2.1 and

2.2), which eliminates liability, is not really an exception. The same occurs with reduction of

penalties for acceptance of the Administration’s proposed assessment (see 2.2).

Extinction of penal liability can only happen extraordinarily by law, for instance by a

fiscal amnesty, of which there is a recent example in Spain approved by Royal Decree-Act

12/2012, of March 30.

A different issue is the reduction of administrative penalties in the following cases:

a) When the taxpayer agrees with the tax inspector on the amount of the tax debt as con-

sequence of a inspection procedure, 50 %.

b) When the taxpayer signs the inspection report accepting the proposal of the tax audi-

tor,30 %.

In addition, but only for the second case, if the payment is made during the voluntary pe-

riod, and no appeal is brought by the taxpayer, one more reduction of the 25 % will be applied.

3.8 Who imposes surcharges/penalties

Exclusively criminal judges impose criminal penalties. All other “surcharges” are ap-

plied in the first instance by the Administration, whose decisions are then subject to judicial

review by the administrative courts.

3.9 Procedures regarding the imposition of administrative and criminal penalties

The procedure regarding criminal penalties is the common criminal procedure just as in

any other crimes. The procedure regarding administrative tax penalties is a specific administra-

tive procedure similar to the general procedure on administrative contraventions, whose rules

apply supplementary. Consequently, the similarities between these two procedures are rather

remote. The administrative infringement procedure is carried out separately from the assessment


procedure, although evidence acquired in the latter can be transferred to the former. However,

the taxpayer may renounce the separation.

Usually the contravention procedure originates from an inspection. If this is the case the

procedure must be initiated within three months after the notification of the resolution of the

inspection procedure. (Article 209 GTA)

The administrative infringement procedure is an adversarial procedure in which the tax-

payer can challenge the Administration’s position and contribute evidence in support of his own.

Once the inquiry is finished the officer in charge drafts a resolution proposal, which is notified

to the taxpayer, who can present further allegations and evidence within 15 days. A final pro-

posal is then submitted to the competent authority for the imposition of the penalty.

The resolution can be appealed to the Administrative Tax Tribunals (Tribunal

Económico-Administrativo,), which are administrative bodies functionally independent from the

hierarchical organization, whose decision is subject to judicial review.

4 Surcharges regarding Third Parties

The procedural position of third parties concerning their obligations is not different from

the taxpayer’s. He is personally liable for the infringements committed by him with complete

independence from the taxpayer. In fact, tax laws refer indistinctly to the taxpayer and third par-

ties under the common term of “liable person” (obligado tributario).

5 Legal Protection of the Taxpayer or Third Parties

5.1 Recourse to legal actions

Article 24.1 of the Spanish Constitution prescribes that “every person has the right to ob-

tain the effective protection of Judges and Courts in the exercise of his or her legitimate rights

and interests, and in no case may he go undefended”. No doubt has been put forward that the

system of remedies in tax matters sufficiently fulfils this constitutional requirement. As has been

mentioned (see 3.9), tax crimes are judged by penal courts with the guarantees of the criminal

process. As for administrative contraventions, the resolutions that impose the penalty are subject

to judicial review.


5.2 Which authority or institution has to be addressed by the taxpayer/third party if

he/she wants to file an objection

Ordinary tax fraud is judged by a single penal judge, whose decision can be appealed to

the Provincial Court, normally composed of three judges. This court judges the aggravated tax

fraud. Its decisions are subject to final appeal (casación) to the Penal Chamber of the Supreme

Court.

The decisions of the Administrative Tax Tribunal (Tribunal Económico-Administrativo)

(see 3.9) can be appealed to the Administrative Courts.

5.3 Interim measures regarding legal protection

Spanish tax law foresees interim measures for the protection of both the Administration

and the presumably liable person. The former include a variety of actions, including withholding

of refunds, provisional attachment and prohibition to dispose of certain assets. The most relevant

interim measure in favour of the taxpayer is stay of the execution. Suspension of the execution

of the judgement can be decided by the criminal court in the case of first time offenders sen-

tenced to imprisonment not exceeding two years. However, this measure has the character of a

probation and differs from stay of execution when appeal is brought against the sentence of ad-

ministrative resolution that imposes the penalty. In this case, suspension of the execution has the

purpose of preventing a possibly irreparable damage to the presumed culprit if he wins the ap-

peal.

Appeal against the court decision of the criminal judge does not necessarily stay the exe-

cution; the effect of the appeal on the situation of the convict is decided in view of the circum-

stances of each case. On the other hand, appeal to the Supreme Court generally suspends the

execution.

Regarding administrative tax infringements, there is a notable exception to the general

principle of continental administrative law according to which administrative acts are immedi-

ately executive. As a consequence, appeal does not automatically suspend the execution of the

challenged act; suspension is exceptional and, as mentioned above, must be motivated by the

irreparable damage that the immediate execution may cause or (as Art. 130.1 of the Act on Ad-

ministrative Jurisdiction puts it) or by the consideration that the execution would deprive the

appeal of its purpose. Suspension is also normally subject to the requisite that indemnity for

eventual damage produced by the suspension is guaranteed.


While the general principles usually also apply in tax matters, appeal against administra-

tive resolutions that impose a penalty for the infringement of tax laws automatically suspends

the execution without any guarantee until the resolution reaches the end of the administrative

remedies. Execution will not be undertaken until the deadline for appeal to judicial review has

elapsed. If meanwhile the presumed offender notifies to the Tax Administration that he has

brought the appeal before the court and requested the suspension, the execution will be post-

poned until the court decides about the request. Usually the courts prolong the suspension. Be-

sides, as previously mentioned (see 2.3), no interest accrues during the time of the suspension.

5.4 Protection through advance ruling

In Spanish tax law there is a formal procedure of consultation which is an equivalent to

advance rulings. Article 88 GTA grants the taxpayer (and third parties subject to tax duties) the

right to address himself to the Tax Administration and submit a “consultation” in writing on any

question raised by the application of tax law in a particular case. The request must be presented

within the deadline for filing the self-assessment or return. Not only individuals and legal enti-

ties can submit a consultation but also certain bodies or associations that represent collective

interests, such as professional associations, chambers, employers’ associations, trade unions,

consumers’ associations, among others, when the question affects all their members.

The answer to a consultation is binding for the administrative bodies in charge of the ap-

plication of taxes but not for the Administrative Tax Tribunals, and obviously not for the judi-

cial courts. The latter must, however, enforce the legally established binding effect if the tax-

payer adheres to it, even if the answer is unlawful. If the taxpayer challenges the Administra-

tion’s position, the courts will of course decide freely. The binding effect ceases if there is a

change of the statutes or case law. It is also subject to the obvious condition that the facts de-

scribed in the request coincide with the real situation. Answers to consultations are not directly

appealable, so the consultant has to wait until the Administration applies the criterion set forth in

the answer to have access to a remedy.

From the perspective of tax penalties, the main effect of the answer to a consultation is

that no liability arises if the taxpayer follows the criteria expressed in it. The same effect applies

if the taxpayer acts according to the Administration’s position set forth in the answer to a con-

sultation submitted by another taxpayer, provided that there is a substantial identity in the facts.


5.5 Alternative dispute resolutions regarding surcharges

Alternative dispute resolution (ADR) methods in strict sense are systems that replace

litigation before a state authorities or court over a contentious issue that has already come into

existence. Such methods, the most typical of which is arbitration, are not present in Spanish tax

law. There are however ADR methods in a broader sense, that include instruments that have the

finality of preventing disputes to arise.

Some of these methods concern valuation of different economic elements. The most tra-

ditional of them is the “adversarial expert valuation” which is a general valuation procedure

applicable when the taxpayer does not accept the value set up by the Administration. According

to this procedure, appraisals are carried out by two experts named by the Administration and the

taxpayer. If the difference between them does not exceed certain limits the latter’s valuation is

accepted. If it does, the final decision is adopted by a third independent expert. Although some

commentators point out the analogies between this procedure and arbitration, it can hardly be

considered an ADR method, since its result can be challenged.

Two other methods provide an advance valuation for tax purposes. The first one is the

“advance valuation agreement”, which provides a binding determination for tax purposes of

income, products, property, expenses and other elements of a taxable event. The procedure is

similar to the one leading to “advance pricing agreements”. The second one is the “advance

valuation of immovable property”, under which the Administration informs the taxpayer, at his

request, about the tax value of immovable property that he intends to acquire and transfer. The

procedure resembles the general consultation one.

In this group of measures designed to prevent disputes we can also include the possibility

for the taxpayer to come to an agreement with the tax inspector about the assessment resulting

from the investigation. The possibility for the taxpayer to accept the assessment proposal of the

inspector has existed for some decades. This acceptance is reflected in the record of the inspec-

tion, which is named “assent record” (acta de conformidad). Although the acceptance is materi-

ally an agreement many authors refuse to acknowledge this character that conflicts with the

dogma that the Administration cannot dispose of the tax debt as a consequence of the legality

principle.

The GTA has introduced a new kind of inspection record named “record with agree-

ment” (acta con acuerdo), plainly recognizing its consensual nature. Its object is limited to “in-

definite legal concepts” or estimates, valuations or measurements of tax relevant elements or


data, which cannot be determined with certainty. This is the field in which the majority of com-

mentators consider that an agreement between the Administration and the taxpayer is compati-

ble with the abovementioned dogma. It is noteworthy that this kind of record determines not

only the tax debt but also the applicable penalties, which are covered as well by the taxpayers

consent.

The taxpayer is enticed to give his acceptance or agreement by a reduction of the appli-

cable penalties of 30% for the “assent record” and 50% for the “record with agreement”.

5.6 Other tax law safeguards

Article 34 GTA under the heading “taxpayer’s rights and guarantees” contains, among

others, a list of 21 rights of different nature and doubtful utility, because most of them are shown

in the general rules of Public Administration. What really matters is how how the taxpayer’s

rights are regulated.

The question regarding the comparison of safeguards in tax law with those in civil, ad-

ministrative and criminal law is not easy to answer. Tax law is to a great extent administrative

law and the guarantees are essentially the same in both fields. Criminal law is only comparable

with tax law concerning tax infringements and penalties. In this respect guarantees in criminal

law and criminal process are naturally higher than those in the administrative contravention pro-

cedure. The regulation of tax crimes is criminal law tout court. Civil law is hardly comparable

with administrative/tax law, which is public law based on very different principles.

Summing up, the level of guarantees in Spanish tax law is satisfactory, as it respects

adequately the taxpayer’s fundamental rights.

6 Deductibility of surcharges

Fines, whether administrative or criminal, are not tax deductible from the tax base of the

Income Tax or the Corporate Tax. The same applies to the collection period surcharges and the

surcharges for late filing; another sign of a residual penal characters of these payments. Interest

is naturally deductible.

7 Numbers

The following Table shows the development of the amount of the different kind of penal-

ties and surcharges settled at State level according to the State budget.


Table 1 Penalties and other surcharges at State level.

2002 200

7 2008 2009 2010 2011 2012 2013

Penalties 211.610.

000 423.

986.000 484.

189.000 666.

519.000 837.

318.000 661.

452.000 708.

087.000 787.

937.000

Surcharges of executive collection

534.140.000 843.621.000

1.081.344.000

1.532.141.000

1.683.777.000

1.405.017.000

1.721.629.000

1.555.388.000

Interests 184.889.

000 169.

128.000 201.

994.000 314.

479.000 427.

848.000 504.

411.000 586.

989.000 519.

728.000

Surcharges of late self-assessment

62.797.000

106.807.000

115.356.000

152.653.000

158.573.000

169.377.000

137.592.000

157.005.000

Total 993.436.

000 1.54

3.542.000 1.88

2.883.000 2.66

5.792.000 3.10

7.516.000 2.74

0.257.000 3.15

4.297.000 3.02

0.058.000

As shown in chart 1, there is a tendency to increase interests, penalties and surcharges of

executive collection in the last years. The main factor of this increase is the impact of the finan-

cial crisis on people and companies’ cash that hinders timely payment of tax debt.

Chart 1 Evolution of penalties, interest and surcharges (2002-2013).

Penalties

Interests

Surcharges of executive collection

Surcharges of late self-assessment

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

2002 2007 2008 2009 2010 2011 2012 2013

Evolution of penalties, interests and surcharges


Table 2 Criminal tax procedures.

2002 2003 2004 2005

Number of cases 1.029 1.548 1.278 1.018

Number of taxpayers 553 752 740 764

Tax evaded (millions) 499,39 666,20 687,67 867,16

Tax evaded per case (millions) 0,50 0,43 0,54 0,85

Tax evaded per taxpayer (millions) 0,90 0,90 0,93 1,14

Table 3 Result of criminal tax procedures %

YEAR CONVICTION ACQUITTAL

2002 81,9 18,1

2003 76,6 23,4

2004 64,7 35,3

2005 67,9 32,1

2006 82,3 17,7

As a result of criminal tax procedures 144 people convicted of tax evasion were in prison

on September 2014.

8 Effectiveness

Penalties, interest and surcharges effectiveness depends on the achievement of the objec-

tives assigned to them.

In the case of interest, its amount is considered sufficient to compensate Administration

for damages when interest is paid in those cases in which it is required.

This is also applicable for surcharges, which usually share a compensatory as well as a

deterring purpose against late payment or non-payment which is accompanied with a coercive

collection procedure. However, as shown in Table 1, late assessment and payments are increas-

ing as a consequence of the economic crisis.


Finally, the effectiveness of the criminal punishment and administrative penalties is un-

der question from a double perspective. On the one hand, a large part of the current penalties

(whether imprisonment or monetary fines), remain suspended or pending until the resolution of

a claim or remedy. On the other hand, the high level of shadow economy - about 22.5% in

Spain, according to the Richard Murphy’s Report Closing the European Tax Gap –shows that

the punitive system has not achieved the purpose of an adequate compliance with tax law obli-

gations.

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