Most tax problems in Spain are resolved within the tax administration, with assessments, surcharges and administrative penalties. But above a certain amount, defrauding the public treasury becomes a criminal offence under article 305 of the Criminal Code, with a real risk of a prison sentence in addition to the tax bill. For residents, for foreign nationals with income or assets in Spain, and for companies, knowing where that line sits, and acting before it is crossed, can change everything.
Fukuro Legal handles economic and white-collar crime, including proceedings for offences against the public treasury, before courts across Spain. Below is an overview of how the offence works and where a defence usually focuses.
When a tax irregularity becomes a crime
The offence against the public treasury is committed, broadly, by anyone who, by action or omission, defrauds the State, an autonomous community or a local authority by avoiding tax, obtaining undue refunds or benefits, where the amount defrauded exceeds the threshold set in the Criminal Code (as a general rule, 120,000 euros per tax and tax period, with a lower threshold for fraud against the EU). Below that figure the matter stays administrative; above it, it can move to the criminal courts. There is also an aggravated form for especially serious cases, for example where the amount is very high or structures are used to hide who is really behind the operation.
Related conduct can also be prosecuted, such as accounting offences, fraud in obtaining subsidies, or smuggling, and a tax investigation often runs alongside questions of money laundering when the funds are then moved or invested.
What it means for residents, expats and companies
A few situations come up repeatedly:
- Individuals who became Spanish tax residents, or stopped being so, and whose worldwide income or foreign assets were not declared as the rules required.
- Foreign owners of property or businesses in Spain where rental income, capital gains or corporate profits were under-reported.
- Companies and their directors, where the criminal liability of legal persons can be in play alongside that of the individuals who took the decisions.
In many of these cases the facts are not in dispute so much as how they are characterised: an honest disagreement over residence, valuation or the application of a double-taxation treaty is not the same as a deliberate scheme to defraud, and that distinction is often the heart of the defence.
Where a defence usually focuses
- Whether the threshold is actually reached once the figures are correctly calculated, year by year and tax by tax.
- Whether there was intent to defraud, as opposed to a defensible interpretation of complex or cross-border rules.
- The lawfulness of how the evidence was obtained, including information shared by the tax administration and data received from other countries.
- Limitation periods, which differ between the administrative and the criminal track.
- The effect of regularising the situation and paying, which the Criminal Code treats favourably when done in time, and, where appropriate, negotiating an outcome that reflects the real situation.
If a company is involved, an effective compliance programme can be decisive; you can read more in our piece on the criminal responsibility of companies in Spain , and on a recurring fact pattern in our article on VAT carousel fraud.
Talk to Fukuro Legal
Fukuro Legal works exclusively in criminal defence, with a strong focus on economic and white-collar matters, and offices in Madrid, Palma de Mallorca, Malaga and Alicante, in English, Spanish and German. If you have received a communication from the tax administration that could turn criminal, or you are already a defendant, the earlier we look at it the better. See our work on crimes against the public treasury and taxation, our overview of tax fraud in Spain and our criminal defence services, or contact us to discuss your situation.
