Spain is cracking down hard on incorrect tax returns from foreign nationals

The Spanish executive tax agency has tightened its tax control plan this year. Special attention will be paid to foreign residents who either do not declare their income or declare it as non-residents. Under a plan published in the Official State Gazette, the tax agency has stepped up controls on the fraudulent scheme of false non-residents.

This means that stricter measures will be taken this year against people who, as tax residents in Spain, spend more than 183 days in a calendar year (January 1 to December 31), instead of paying IRPF personal income tax, pay IRNR non-resident income tax simply by declaring their home in Spain, or submit no declaration at all.

A tax lawyer Isaac Abad, who has been advising foreign nationals and property owners in Spain for more than 25 years at his law firm Abad Abogados, says: "The benefit they get from this is possible because the non-resident income tax has a lower tax rate than the IRPF personal income tax, which allows only income earned in Spain to be taxed without having to declare all income earned worldwide.

The tax agency has, however, detected a large amount of fraud in this area and is prepared to combat it with the wealth of information it has. "In addition, information about people who own companies with luxury homes will be used," Abad says. "To prevent indirect ownership of real estate by non-residents, special plans will be implemented to ensure the correct taxation of wealth. "

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

Electronic payments

The new guidance for 2023 reinforces the need to take action on the economic activities of persons using "virtual payments". In particular, there will be an attempt to obtain information on digital payments made through organizations or apps registered abroad under European regulations, Abad says. "There is a particular focus on the use of virtual currencies. The need to check their taxation is noted and activities to search for crypto-assets subject to confiscation are encouraged. "

International Taxation

The Central Office of Large Taxpayers, together with the National Bureau of International Taxation, has implemented a "360 strategy" to strengthen control over tax risks in the pricing of international transactions between multinational companies. Thanks to this strategy, control has been strengthened in recent years. "Control activities in this area will be strengthened through joint audits with other tax administrations.

The fight against the shadow economy.

In the course of 2023, the Spanish tax administration will strengthen its control over 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 real estate construction, remodeling and renovation, says a tax attorney.

Fighting fraud at the foreclosure stage

Together with the expansion of the analysis of collection risks to new manifestations of wealth, the guidance for 2023 emphasizes the importance of strengthening international cooperation on the collection of tax claims, through additional use of information exchange with other administrations and improved tools to identify debtors with signs of wealth abroad, especially within the EU.

Isaac Abad recommends that all foreigners who own real estate in Spain or have any income should consult a qualified tax attorney to have the latter handle the filing of tax returns for them.

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Specialized in real estate transactions, real estate, taxes, inheritance and residence in Murcia Abad & Asociados Abogados y Economistas, S.R.L.. - is a firm of English-speaking lawyers and accountants founded in 1996 in Murcia by Isaac Abad, winner of the "Best Lawyer 2022" award for Tax Law in Murcia, awarded 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 Murcia, Los Alcazares and La Senia in Orihuela Costa, Alicante, it is easy for foreigners and expatriates living abroad in Spain to access the legal services they need. The Abad team can help you with any issues related to real estate and property law, taxation, litigation and commercial law in Spain. They can help you get an NIE number to be able to conduct official paperwork in Spain, as well as fulfill residency and visa requirements. They can also handle any tax returns for residents and non-residents in Spain, including property taxes and double taxation issues of international borders, as well as inheritance tax and wills. Whether it is the official registration of your own business in Spain, litigation or prosecution for any reason, Abad & Their success in helping clients with these issues has made Abad Abogados one of the leading firms of attorneys, accountants and tax advisors in the Region of Murcia and the Province of Alicante.