The Spanish Tax office is to introduce new computer software, enabling it to check if the sale price has been under-declared, as soon as the sale of any property in the country has been made.
According to Peter Esders, partner of the UK-based International Law Partnership, this is the latest innovation in a long list of measures the authorities are taking to stamp out tax fraud in Spain. Peter Esders tells OPP “I personally see it as a good thing. We’ve had clients who have pulled out of a purchase in Spain because they’ve been asked to under-declare the value of the property. From an Anglo Saxon point of view, we like to do things properly and don’t want to lie to the authorities.”
40% of the tax agency’s work force will be working on this project, a 25% increase on the number who worked on property tax this year, in an attempt to clean out the property industry.
The tax office is also determined to tighten up on under-declaration of income earned from letting property in Spain. Six out of ten properties in Spain are not declared to the authorities, resulting in a loss of €1.8billion a year for the government.
New ideas are being introduced by the Spanish tax authority to expose fraudsters and get the message across to Spanish nationals and foreigners that property tax evasion is being steadily wiped out, and this tax dodging will soon be a thing of the past.
In an effort to tackle under-declaration, by law buyers must now declare whether the property is bought with cash or a mortgage. This allows tax officials to check both the seller’s and the buyer’s bank accounts to verify the price paid. New laws have also specified that a property owner’s tax ID number should be logged onto the property register, allowing the authorities to confirm that all taxes have been paid.
Some other strategies to tackle this problem include, property registry numbers on electricity bills to trace how much a property is being used, taxmen looking through the newspaper classified ads and property websites to find property rentals, and chatting to local business people and hotel owners to find out names of people renting their property and not registered for tax.