On October 30, 2012, the Official State Gazette published Law 7/2012, of October 29, 2012, amending tax and budgetary legislation and adapting financial legislation to step up proceedings to prevent and fight fraud. It is a tax law aimed primarily at improving the persecution of fraud and the collection of tax debts. Of the measures adopted with this aim, the following are worth highlighting:
The key measures within the sphere of tax collection are as follows: (i) the liability of the successors of dissolved entities has been expanded; (ii) a new liability scenario has been added for the directors of enterprises who, while continuing to perform their activity, repeatedly file self-assessments without payment; (iii) the tax authorities’ powers have been expanded to adopt injunctive measures; and (iv) new infringements have been added for breaches of formal obligations and new penalties have been added for cases of resisting, obstructing, excusing from or refusing tax proceedings.
It makes it obligatory to disclose assets and rights located abroad and sets out the effects of a breach of this obligation for personal income tax and corporate income tax purposes, by treating them as unjustified gains or unreported income.
It disallows payments in cash in transactions with a value of €2,500 or more where any of the parties acts as trader or professional, or €15,000 for a nonresident individual who is not a professional or trader, and sets out a very onerous penalty regime.
It makes amendments to the VAT legislation in order to (i) prevent fraudulent practices, especially in supplies of real estate, and to (ii) adapt the rules on reporting and assessing VAT to the insolvency legislation. Some of these amendments have also been included in the legislation governing the Canary Islands indirect tax (“IGIC”).
In addition, while not related to fraud prevention, the opportunity was taken to include in this law an amendment to article 108 of the Securities Market Law. Following this amendment, in transactions involving shares in entities at which more than 50% of their assets are real estate, transfer tax or VAT will only apply where the transaction was carried out to fraudulently avoid the payment of taxes. This is presumed to occur, unless proven otherwise, when the indirectly transferred real estate is not used in economic activities.
These changes are discussed in greater detail below.