Spain is cracking down on foreigners filing incorrect tax returns.

This year, the Spanish tax agency is introducing a stricter tax control plan for foreign residents who either do not declare their income or declare themselves as non-residents. This plan provides stricter measures against people who are tax residents in Spain but spend more than 183 days in a calendar year (from January 1 to December 31) not paying IRPF personal income tax, but paying IRNR non-resident income tax, simply declaring the identity of their home in Spain or not filing any declarations.

Isaac Abad, a tax lawyer who has been advising foreigners and foreign property owners in Spain for more than 25 years at his law firm Abad Abogados, says: "The advantage they get is possible because the non-resident income tax has a lower rate than the IRPF personal income tax, allowing only income earned in Spain to be taxed without having to declare all income earned worldwide." However, the tax agency has detected a large amount of fraud in this area and is prepared to combat it with the information available. "In addition, information on individuals who own companies with high-end homes will be used," says Abad. "To prevent indirect ownership of real estate by non-residents, specific plans will be implemented to ensure that wealth is taxed correctly."

In short, the tax agency will impose stricter controls on citizens residing in Spain who file a non-resident income tax return (IRNR) in order to artificially lower their tax bill.

Electronic payments

The 2023 guidance reinforces the need for action to detect economic activities that utilize "virtual payments." In particular, information will be collected on digital payments made through legal entities or applications registered abroad, within the framework of European regulations, says Abad. "Particular attention is paid to the use of virtual currencies. The need to verify their taxation is emphasized and measures are taken to search for cryptocurrencies subject to confiscation."

International taxation

The Central Office of Large Taxpayers, with the support of the National Bureau of International Taxation, is implementing a "360 strategy" to strengthen the control of tax risks in the pricing of international related transactions between multinational companies. Through this strategy, it has been possible to strengthen controls in recent years. "Control activities in this area will be strengthened through joint audits with other tax administrations. In addition, long-term compliance will be sought through preliminary assessment agreements," Abad assures. "Attention will continue to be drawn to those structures and behaviors that illegally take advantage of the low taxation of certain territories, tax regimes or structures that can be copied or standardized for use by a large number of taxpayers."

Fighting the shadow economy

During 2023, the Spanish tax agency will increase its scrutiny of areas and business models where there is a risk of the shadow economy. This will include traditional tax audits in many sectors, with a particular focus on construction, renovation and repair of real estate, says a tax lawyer.

Control of fraud at the recovery stage

Together with the expansion of the risk analysis on the collection of new manifestations of wealth, the guidance for 2023 emphasizes the importance of strengthening international cooperation on the collection of tax claims by continuing to use information exchange with other administrations and improving tools to identify debtors with signs of wealth abroad, especially within the European Union.

Isaac Abad advises any foreigner who owns property in Spain or has any income to consult with a qualified tax attorney to take care of their tax declarations.

Address: Avenida de la Libertad Edificio Europa, No.

Phone: +34 968 58 30 53

Abad & Asociados Abogados y Economistas, S.R.L. is a firm of English-speaking lawyers and accountants specializing in conveyor systems, real estate, taxes, inheritance law, and residency inMurcia. It was founded in 1996 in Murcia by Isaac Abad, who was awarded the "Best Lawyer of 2022" in the field of tax law in Murcia by "Best Lawyers".

The law firm Abad Abogados Murcia specializes in providing innovative legal solutions to its clients, prioritizing quality, satisfaction, and success. With offices in central areas of the city of Murcia, Los Alcázares, and La Zenia in Orihuela Costa, Alicante, foreigners and foreign citizens abroad can easily access the legal services they need. The Abad team can assist you with any issues related to real estate, taxation, litigation, and commercial law in Spain. They will help you obtain an NIE number to officially process documents in Spain, as well as meet residency and visa requirements to facilitate every step of moving to Spain for those wishing to come and live in the country. They can also handle tax declarations for residents and non-residents in Spain, including property taxes and issues of double taxation across international borders, as well as inheritance tax and wills. Whether it's the official registration of your own business in Spain, litigation, or facing court for any reason, Abad & Associates will be by your side. Their unwavering success in helping clients navigate these issues has made Abad Abogados one of the leading firms of lawyers, accountants, and tax consultants in the Murcia region and the province of Alicante.