Inspections and penalties against multinationals increase

September 17, 2021

Through the “Business Insider” website, journalist Adrián Varela commented on the repercussions of the Law on Measures to Prevent and Combat Tax Fraud, resulting in the application of greater measures aimed at preventing companies and individuals from evading their obligations to the Treasury.

1. Measures implemented

Aiming to have greater control regarding the income generated by cash operations, Cryptocurrencies, or real estate assets and wealth, the Tax Agency has increased the supervision over companies, which work in several tax regimes by operating in several countries to avoid tax fraud.

As Varela comments on ” El Confidencial”, the Treasury is increasing the number of inspections to operations with transfer pricing in multinationals to avoid intra-group operations of more than 250,000 euros with lower values than the market ones, resulting in more penalties for tax avoidance in these large companies.

IIn addition to these measures, the Tax Agency focused its inspections with a net turnover exceeding 45 million euros to review all transactions between subsidiaries of the same company valued at more than 250,000 euros to avoid tax arbitrage that could be detrimental for the collection of corporate income tax.

2. Applicable penalties

According to the website agent, the lack of documentation is penalized with a fine of 1,000 euros for each piece of information and 10,000 euros for a set of information, although limited to 10% of the value of the operations related to corporate income tax, IRPF (Impuesto sobre la Renta de las Personas Físicas – Income Taxes on Individuals) or IRNR (Impuesto sobre la Renta de los No Residentes – Income Tax on Non-Resident) or 1% of the net amount of the turnover.

On the other hand, it is important to point out that in the event of errors in intra-group transactions, the penalties are increased up to 15% of the amounts calculated erroneously, and the refund of that value while the submission of the tax form after the deadline or incorrectly entails fines of between 0.5% and 2% of the transactions affected.

Source: Business Insider 08/09/21