Spanish Tax Penalties and Infringements under LGT

Understanding Tax Penalties and Discounts in Spain

Important Note: A total discount of 47.5% may be applied to tax sanctions. Some interpretations suggest that these discounts, particularly the 48.75% figure, could infringe upon the right to effective judicial protection, as they may discourage taxpayers from challenging the settlement and sanction.

Agreement Protocol: 50% Penalty Reduction

When the Tax Inspection and the taxpayer agree that the law is vague, signing an agreement can lead to a 50% reduction in the penalty for any infringement.

Basic Types of Tax Offenses (Articles 191, 192, 193 LGT)

Note: The most serious offenses include not only failing to pay due amounts but also unduly requesting refunds, among others.

• Violations of the Obligation to Declare with Financial Impact:

  • Violation of Result: Failure to declare income or unduly obtaining refunds.
  • Breach of Duty to Declare: Failure to file, incorrect self-assessment, or improper filing.

• Important Distinction: If a declaration is filed correctly but the payment is not made, it is NOT an offense (Art. 161.b) LGT). In such cases, the collection process is initiated, but no penalty is applied. If the administration claims non-payment or non-declaration before a claim is made, surcharges are applied, but not sanctions.

Classification of Tax Offenses by Severity and Amount

• Minor Economic Damage:

  Considered a minor offense.

• Concealment (Art. 184.2 LGT):

  Considered a serious offense, typically involving amounts from €3,000.

  Example of Concealment:

  Omitting data, e.g., declaring €700 income instead of €1,000.

• Use of Fraudulent Means (Art. 184.3 LGT):

  Considered a very serious offense. This involves deliberate, difficult-to-detect actions. Failure to declare withholdings is always considered serious.

  Example of Fraudulent Means:

  If delays in payment are allowed, the offense is always serious, regardless of the amount.

  Key Aspects of Article 184.3 LGT:

  Fraudulent use, compatibility issues, or substantial anomalies. Even if the unpaid amount is only €1, the offense is serious.

  Combined Offense Example:

  A company fails to declare €3,500 and also presents accounting irregularities (inaccuracies and omissions) amounting to €2,000. This constitutes a VERY SERIOUS offense.

  For an amount of €1,000, the offense is considered SERIOUS.

Tax Penalties and Fine Proportions

• Minor Violation:

  A proportional fine of 50%.

  Example:

  If the undeclared amount is €1,000, the fine is 50% (€500). The total payment due is €1,000 (original) + €500 (fine) = €1,500.

• Serious Infringement:

  A proportional fine ranging from 50% to 100%.

  Examples:

  • If the undeclared amount is €10,000:
    • For a 50% fine: €5,000. Total payment: €10,000 + €5,000 = €15,000.
    • For a 100% fine: €10,000. Total payment: €10,000 + €10,000 = €20,000.
  • Another example for a 100% fine: If the undeclared amount is €100,000, the fine is €100,000. Total payment: €100,000 + €100,000 = €200,000.

• Very Serious Infringement:

  A proportional penalty ranging from 100% to 150%.

Graduation of Sanctions (Art. 187 LGT)

Example Scenario for Graduation:

A company fails to declare €3,500 and has accounting irregularities amounting to €1,000. This is classified as a GRAVE (Serious) offense.

The penalty for a serious offense is typically 50-100% (Art. 191.3 LGT).

Financial Loss Impact on Penalty:

• a. 25-50% increase in financial loss: Penalty increases by 15 points, resulting in a 65% penalty. For example, on a base of €3,500, the penalty would be €2,275.
• b. 50-75% increase in financial loss: Penalty increases by 20 points, resulting in a 70% penalty. For example, the penalty could be €2,625.

Note: The specific base amounts for calculation in the original text (e.g., "Tenía that have entered €12,000" and "€6,000 to be entered") are unclear in their relation to the final penalty amounts provided in this example. The calculations shown are based on the €3,500 undeclared amount for consistency with the first part of the example.