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.
Spain’s tax office, known as 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 of their foreign assets worth over €50,000 (£39,353, $56,762).
Tax evasion clampdown
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 (GFC) in 2008.
The Hacienda has succesfully brought cases against a number of 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 €1m (£880,240, $1.06m).
Meanwhile, last July Argentinean footballer Lionel Messi was sentenced to 21 months in prison for stashing €4.1m in tax havens in Belize and Uruguay between 2007 and 2009.
Data sharing
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.
“With all this information combined, the new system in place will work as a big data container capable of estimating the total wealth of each taxpayer in Spain,” said European IFA firm Blevins Franks on its website.
The firm, which has offices in Spain, Portugal and France, added that the data sharing agreement is likely to affect many of its British expat clients who may have investments in the Isle of Man, or bank accounts in Switzerland, or pension funds in the UK as the Hacienda will receive information about these assets.
Spain’s wealth tax
Last week, it emerged that that the Spain has decided to keep the controversial wealth tax, which levies a charge on worldwide assets over €167,129, as its government struggles to bring the national deficit down to 3.1%.
“Wealthy individuals are the latest target because the Hacienda sees them as more likely to have opportunities to use aggressive tax planning,” said Blevins.
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 ‘flexi-access’ in line with the UK’s pension freedoms introduced last year.
Identifying ‘fake’ residency
According to Blevins Franks, one focus for the tax authorities will be clamping down on false claims of residency.
“They plan to catch out those who actually live in Spain but do not declare their income and assets here, usually claiming residency in a low taxation territory,” the firm revealed.
