Spain targets wealth disparity in new tax control initiative

Tuesday 18 March 2025 - 14:20

By: Dakir Madiha

Spain targets wealth disparity in new tax control initiative

Spain's tax agency has unveiled an ambitious new plan aimed at scrutinizing individuals whose visible wealth does not align with their reported income. This initiative is part of the Spanish Tax Agency's (AEAT) Tax Control Plan for 2025, which emphasizes the investigation of taxpayers showing significant discrepancies between their lifestyle and tax declarations.

The AEAT's new strategy will focus on various areas, including the illicit use of shell companies, income concealment schemes, fraudulent deductions, and the earnings of non-residents. The agency aims to combat the underground economy, which presents considerable challenges to tax compliance.

In contrast to conventional high-net-worth individuals, the AEAT highlights specific cases where fraudsters exploit shell companies to misrepresent personal expenses, hide assets, or create fictitious loans to obscure income. The Treasury's objective is to determine the actual personal income that should be reported, rather than allowing it to be classified as deductible expenses or investments aimed at defrauding the tax authorities.

The scrutiny will extend to the use of corporations to improperly deduct personal expenses, particularly those disguised under the names of partners or family members.

Additionally, the Treasury plans to intensify oversight of business owners or professionals who do not receive income through credit card transactions in sectors where such payments are prevalent. This includes a focus on fraudulent business activities, such as the issuance and receipt of fake invoices aimed at obtaining illicit VAT refunds.

For non-residents, the tax agency will ramp up efforts to track income derived from real estate and ensure that artists and athletes are properly reporting their earnings.

The AEAT will also monitor industries particularly prone to underground economy practices, paying specific attention to payment methods utilized abroad to evade reporting to the AEAT.

Furthermore, enhanced oversight will be directed at online neobanks and alternative payment methods, including cryptocurrencies, which have increasingly been associated with tax evasion efforts.

The new Tax Control Plan has sparked skepticism among the tax technicians' union Gestha, which argues that enforcement efforts predominantly target smaller entities, including individuals, the self-employed, and small-to-medium enterprises (SMEs).