Spanish tax regulations establish severe penalties for infringements. In this respect, note must be made to the recent publication of General Taxation Law 58/2003, on December 17, 2003, which has come into force on July 1, 2004, and has abolished the General Taxation Law in force since 1963. The main objectives of the abovementioned new Law are the following: to strengthen taxpayers’ safeguards and legal certainty; to encourage the unification of the approaches taken by the tax authorities in inspections; to enable the use of new technologies and modernize tax procedures; to establish mechanisms that reinforce the fight against fraud, the control of taxes and the collection of tax debts; and to reduce the current level of tax litigation.

In general, according to the new Law the failure to pay taxes to the tax authorities can be penalized with fines ranging from 50% to 150% of the amount not paid and, in certain cases, with forfeiture of the right to tax relief, to receive subsidies from the State and to contract with the State or other public agencies for a period of up to five years.

Any delay in payment of tax debts gives rise to an additional surcharge of 5% if payment is made within three months after the obligation became due, of 10% if payment is made after this three-month period but within six months after the obligation became due, of 15% if payment is made after the six-month period but within twelve months after the obligation became due and of 20% (in this case, plus late payment interest) if the payment is made after twelve months since the obligation became due.

The legislation also establishes significant requirements for furnishing information to the tax authorities, with heavy fines for noncompliance.

In the case of infringements by legal entities, the directors of the entity may be jointly and severally liable for payment of the fine if they had consented to or participated in the commission of the infringement.

The fraudulent nonpayment of more than €90,151.82 of tax constitutes a tax offense. The €90,151.82 threshold is per year and per tax.
It is also a tax offense to fraudulently obtain a state subsidy of more than €60,101.21.

Tax offenses are punishable by fines of up to six times the amount defrauded and imprisonment for between one and four years.

In the case of legal entities, the tax offense is deemed to have been committed by the legal entity’s directors or its legal representative.