SPAIN: Spanish Tax Agency Intensifies Action Against Tax Evasion

New measures target self-employed individuals prepared to go underground financially.
The Spanish Tax Agency (Agencia Tributaria) is ramping up its fight against tax evasion, positioning itself as the unapologetic watchdog over self-employed individuals who indulge in illegal practices such as under-the-table payments. It’s not just talk; the Agency has issued unequivocal warnings to anyone caught skirting the law.

Recent pronouncements from the Hacienda make it crystal clear: self-employed individuals engaging in “cobros en negro” (undeclared payments) are squarely in the Agency’s crosshairs. The practice, pervasive across certain sectors, undermines economic fairness and distorts competition. The Agency is gearing up to act decisively against any infractions it identifies.

So, how is the Tax Agency changing its game plan? A significant shift has been made requiring banks to submit detailed transaction information every month, which includes payments made via cards and popular apps like Bizum. This systematic information barrage aims to unearth discrepancies between declared income and actual transactions and serves as part of Hacienda’s broader strategy to combat tax fraud.

Not only is there scrutiny over traditional banking transactions, but the Agency is also stepping up control over prepaid and virtual cards—often used by those seeking anonymity—to prevent income concealment. This heightened watchfulness is about keeping income declarations accurate and ensuring taxpayers play by the rules.

Adding more weight to its enforcement capabilities, the implementation of electronic invoicing for small businesses and freelancers is another strategic layer to minimize unpaid taxes and opacity related to cash transactions. With this shift, the Tax Agency can simplify the monitoring of financial activities, generating greater fiscal transparency.

But the stakes are high—violations could lead to hefty fines. The Agency warns, “Continuar con la práctica de cobrar en negro puede acarrear multas, que pueden oscilar entre el 50% y el 100% del monto no declarado,” directly reflecting the severity of consequences for infractions.

Piling on the legal aspect, the Supreme Court of Spain recently delivered monumental clarity on the limits of Hacienda’s powers. On January 7, 2025, the Court concluded, particularly referencing Article 66.a) of the General Tax Law, which affords the Tax Agency four years to ascertain and collect tax debts. Beyond this grace period, the Agency forfeits its right to pursue claims, even if they involve serious offenses exceeding €120,000.

This ruling has monumental ramifications. The Court stated clearly, “La Abogacía del Estado defiende una capacidad indagatoria hacia atrás que carece de toda cobertura legal,” which means the Tax Agency cannot extend its jurisdiction beyond the four-year limit for administrative audits, albeit it can report fiscal crimes. Indeed, prospective requests for tax investigations can commence only within the boundaries set out by law.

Finally, with such enforcement changes and sweeping determinations from higher courts, it’s crystal clear: the Spanish Tax Agency is not backing down—far from it. Tax evasion is being met with stringent measures, and self-employed citizens must weigh the risks of illegal earnings against the benefits of complying with tax regulations.