Spain has announced new measures to crack down on tax fraud by wealthy individuals, as the country becomes one of the early adopters of the automatic exchange of information regime.
Unveiled in April 2015, Spain is one of 100 countries set to share information on taxpayer’s assets and income later this year in a bid to tackle tax evasion. The list includes so called tax havens like Switzerland, Channel Islands, Isle of Man, Cayman Islands, Monaco and Singapore.
The Spain tax office, the Hacienda, has confirmed it now has greater powers to analyse and cross-reference data, making it much easier to investigate the tax affairs of wealthy individuals. This includes personal income tax and Modelo 720, a wealth tax return introduced in 2012, which requires every Spanish tax resident to declare all their foreign assets worth over 50 000 EUR (or 39 353 GBP).
The Spanish government has taken a much tougher stance on tax fraud by the wealthy in recent years as it struggled to deal with the economic fallout from the Great Financial Crisis in 2008.
The Hacienda has successfully brought cases against several footballers over tax evasion while playing for Spanish teams such as Barcelona.
In January, Arsenal striker Alexis Sanchez pleaded guilty to a Spanish court to two counts of tax fraud of almost 1 million EUR. Meanwhile, last July Argentinean footballer Lionel Messi was sentenced to 21 months in prison for stashing 4.1 million EUR in tax havens in Belize and Uruguay between 2007 and 2009.
Information being shared will include personal data such as name and address, country of tax residence and tax identification number.
The information will include investment income taxpayers earned over the year, such as interest, dividends, income from certain insurance contracts and annuities. Account balances are also reported, as are gross proceeds from the sale of financial assets.
It has also emerged that Spain has decided to keep the controversial wealth tax, which levies a charge on worldwide assets over 167 129 EUR, as its government struggles to bring the national deficit down to 3.1 per cent.
Last October, Spain also unveiled a new rule, under the Modelo 720 regulations requiring British Expats to declare the money they have in Malta-based recognised overseas pension schemes (ROPS) that allow flexible-access in line with the UK’s pension freedoms introduced last year.