When we talk about Hacienda in Spain, we immediately think about taxes and tax regulations, don’t we? That’s why today we want to inform you about what are the types of penalties of the Tax Agency, so you can avoid them and keep up to date with your declarations, so keep reading below and find out more about it!

What is a sanction from the Tax Agency?

As we have already mentioned, in Spain we all have tax obligations, but what happens if you do not comply with them? This is where the imposition of a penalty is worth mentioning.

In this sense, we understand a penalty from the Tax Agency as a fine issued by the Treasury to a taxpayer, whether an individual or a legal entity, in the event of committing a tax infringement.

What is a tax violation?

Then, it is important to highlight what is meant by a tax infringement. And, in a nutshell, a tax infringement is committed when the current tax regulations set forth in Law 58/2003 of December 17 (the General Tax Law) are not complied with.

Therefore, it refers to an action or omission of a culpable nature involving a taxpayer in Spanish territory.

Failure to file Income Tax (IRPF) or Value Added Tax (VAT) returns are some of the main cases in which taxpayers in Spain obtain a tax infringement.

Do you want to avoid a fine or a penalty from the tax authorities? Then, in the following section, we will tell you about the requirements that are subject to penalties in the country.

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When is there a tax violation?

According to the Internal Revenue Service, in order for a taxpayer to be considered in violation, 5 key aspects must be present:

Action or omission

Refers to active behavior, or inactive behavior when there is a duty to act.

Non-compliance with laws

For an action to be considered infringing, it must be against a general rule.

3. It must be contained in a law

This means that the infringing conduct must be stipulated as such in a law; in this case the General Tax Law. Therefore, if it is not considered an administrative infringement, a penalty cannot be imposed.

4. Voluntariness

As its name indicates, the conduct that provokes the sanction must be carried out by its own decision and knowing the consequences that it may generate. This excludes cases of force majeure

5. Guilt

It may be determined by negligence, or it may be determined by intent; and as long as there is proof of fault, the Internal Revenue Service may proceed to penalize the following

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Types of tax violations

In order to establish a penalty, the tax authorities must detect a tax infringement as provided for in articles 191 to 206. Currently, there are three types of infringements: minor, serious or very serious; and most of them refer to fixed or proportional fines.

In this sense, the taxpayer will not only have the obligation to cancel his return, but will also have to face the penalty received in economic terms.

In addition, there are sanctions involving the suspension of the exercise of a profession, employment or public office, with a minimum term of 3 months and a maximum of 12 months.

Minor infraction

Applies when the basis of the penalty is equal to or less than 3,000 euros regardless of whether or not there is concealment.

In this case, a proportional fine of 50% is established.

Serious infringement

Applies when the basis of the penalty is greater than 3,000 euros and concealment is detected. In addition, when the infraction involves amounts withheld and an amount equal to or greater than 50% of the base of the penalty.

In this case, a proportional fine of 50% to 100% is established.

Very serious infringement

Applies whenever fraudulent means have been used and when the infraction involves amounts withheld and an amount greater than 50% of the penalty base.

In this case, a proportional fine of 100% to 150% is established.

On the other hand, Spanish law establishes that the following circumstances may be considered positive for granting any of the infractions, depending on the seriousness of such circumstances:

• Failure to submit the corresponding data at the time of filing your tax returns, or in case of omission of relevant information

• By submitting false invoices or documents, and that represent 10% more than the penalty base

• By using intermediaries and concealing your identity through the use of a third party

• By relying on fraudulent means

What are the main penalties imposed by the Tax Agency?

And if you want to know what are those actions that lead to the Treasury to establish a penalty in Spain, here are the main reasons:

• Failure to pay all or part of the tax debt within the term established in the regulations for each tax (VAT or personal income tax).

• Failure to comply with the obligation to submit the declarations or documents required for the corresponding settlement to be made.

• Improperly obtaining refunds, benefits or tax incentives

• Failure to pay the tax debt resulting from a self-assessment

• Failure to file self-assessments or returns on time without economic loss to the Treasury.

• Failure to report a change of tax domicile

• Confirming a draft income tax return with erroneous or incomplete information

• Hiding income from a second payer

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What are the surcharges and reductions stipulated in the Tax Agency’s penalties?

Surcharges for late filing

Depending on the time elapsed after the last day established to file your tax return, a higher or lower percentage will be applied as follows:

• Within the following three months: surcharge of 5%.

• Within the following six months: surcharge of 10%.

• Within the following twelve months: 15% surcharge

• After 12 months: surcharge of 20%.

Conformity reduction

In this case, if the sanctioned party accepts the fine imposed by the tax authorities, he/she may benefit from a 30% reduction.

Reduction for payment

In order to obtain a reduction for payment, the self-employed or SME taxpayer in question must pay the amount corresponding to the penalty within the stipulated term without recourse to it. And, he/she will be entitled to a 25% reduction, in case he/she has previously successfully completed the reduction for compliance.

Tax regulations are a key element for both the Spanish economy and the business world today, so we invite you to keep up to date with the stipulated deadlines and avoid future penalties from the Tax Agency that may harm you. Do you need advice on the subject? Click here and contact our experts!