Since the reform introduced by Organic Law 7/2012 of 27 December, voluntary and timely tax regularisation no longer operates as a ground for exemption from punishment, but as an element that prevents the offence under Article 305 of the Spanish Criminal Code from arising at all. Put simply: someone who regularises in time is not a pardoned offender, but someone who has committed no offence.
The distinction is not merely academic. It determines whether there is a criminal act at all, it affects whether any instrumental forgery can be prosecuted and, above all, it depends on a factor the taxpayer still controls today but may no longer control tomorrow: the moment they receive the first notification from the tax authorities.
The tax offence
The constitutional basis of the offence against the Public Treasury is Article 31.1 of the Spanish Constitution, which requires everyone to contribute to public expenditure. On that basis, Article 305.1 of the Criminal Code punishes anyone who, by action or omission, defrauds the State, regional, foral or local treasury by evading the payment of taxes, of amounts withheld or that should have been withheld, or of payments on account, by unduly obtaining refunds or by unduly enjoying tax benefits, provided that the amount defrauded exceeds 120,000 euros. For a full analysis of the offence, see our guide to tax offences under Article 305 of the Spanish Criminal Code.
It is worth being precise about what makes the conduct wrongful. Mere non-payment is not punished (the tax offence is not imprisonment for debt); what is punished is the concealment or misrepresentation of the taxable event in order to avoid the assessment and payment of the tax debt. Filing a tax return does not rule out fraud if the return conceals income, and failing to file when there is a duty to do so is equally an offence. Dolus eventualis is sufficient.
Three structural features have direct consequences for regularisation:
- A special offence. Only the taxpayer can be the perpetrator; an outsider (extraneus) is liable as a participant, with the possible reduction of the penalty under Article 65.3 of the Criminal Code.
- Amount per tax and per tax period. Under Article 305.2, the amount is calculated for each tax and each tax or filing period; where that period is shorter than twelve months, by calendar year.
- No continuous offence. Each year constitutes, where applicable, a separate offence. Regularisation must therefore be analysed year by year and tax by tax.
2012: from exemption from punishment to element of the offence
Before Organic Law 7/2012, the former Article 305.4 treated regularisation as a ground for exemption from punishment (excusa absolutoria): the offence had been committed, but the legislature waived the penalty for those who regularised. The reform changed that construction. Article 305.1 now includes in the definition of the offence the clause “unless they have regularised their tax situation under the terms of paragraph 4 of this article”, and the preamble of the law describes regularisation as the reverse of the offence, which fully neutralises the wrongfulness of the conduct.
The consequence is significant: timely regularisation excludes the offence itself. There is no criminal act to prosecute and no penalty to waive. Legal scholars still debate the exact nature of the concept (a negative element of the offence, or a ground for lifting the penalty with reinforced effects), but the wording of the law and the stated intention of the legislature clearly point to the former.
The same logic applies to Social Security offences, where Article 307 contains a regularisation clause with a similar structure.
Requirements: acknowledgement, full payment and timeliness
Article 305.4 requires two substantive elements and one temporal element.
Full acknowledgement and payment of the tax debt. Declaring is not enough: the amount must be paid. And the tax debt, within the meaning of Article 58 of the General Tax Act (Ley General Tributaria, LGT), includes not only the tax itself but also, where applicable, late-payment interest and the surcharges for late filing under Article 27 LGT. A partial regularisation, or one that does not cover the entire debt for the specific tax and period, does not have this effect.
Timeliness. Regularisation must take place before any of the following occurs:
- The tax authorities notify the start of verification or investigation proceedings aimed at determining the tax debts being regularised.
- Failing such proceedings, the Public Prosecutor, the State Attorney (Abogado del Estado) or the legal representative of the regional, foral or local authority files a criminal complaint (querella or denuncia).
- The Public Prosecutor or the investigating judge takes steps that give the taxpayer formal knowledge that proceedings have been opened.
Two points deserve attention. First, the bar is objective: what counts is the notification, not the taxpayer’s will or remorse. Second, the law refers to proceedings “aimed at determining the tax debts being regularised”, which suggests that proceedings concerning a different tax or year do not, on their own, close the door to regularising the others. This second point, however, requires case-by-case analysis.
Effects: beyond the tax due
Timely regularisation has three effects that make it a first-rate tool.
No tax offence. There is no offence against the Public Treasury for the tax and period regularised.
Instrumental forgery. The last paragraph of Article 305.4 prevents the person from being prosecuted for accounting irregularities or other instrumental forgery committed beforehand exclusively in relation to the regularised debt. The clause is strict: it does not extend to separate offences unrelated to the fraud itself and, in particular, not to the unlawful origin of the funds.
Debts already time-barred for the tax authorities. The tax authorities’ right to assess becomes time-barred after four years (Article 66 LGT), whereas the tax offence is time-barred after five years for the basic offence and ten years for the aggravated offence under Article 305 bis. Article 305.4 itself provides that regularisation takes effect even where the debts paid could no longer be assessed by the tax authorities because of the limitation period. There is therefore a window in which the year is closed for the tax authorities but still open for the criminal court, and in which regularising still makes complete sense.
On the administrative side, spontaneous regularisation without a prior request from the tax authorities generally rules out penalties, which are replaced by the surcharges under Article 27 LGT. Following Law 11/2021, these amount to 1% plus an additional 1% for each full month of delay, up to 15% from twelve months onwards, from which point late-payment interest also accrues.
Executives and foreign nationals: where the risk is concentrated
The threshold of 120,000 euros per tax and year keeps the tax offence well away from the average taxpayer, but not from those with high earnings or international assets. In practice, the most frequent situations are:
- Unrecognised tax residence. Foreign nationals who, because they spend more than 183 days in Spain or because their centre of interests is in Spain (Article 9 of the Personal Income Tax Act, LIRPF), are tax resident without having accepted it and continue to pay tax only in their home country.
- Accounts, securities and property abroad. Income generated outside Spain (dividends, interest, rents, capital gains) that a resident must include in their tax base on a worldwide basis, irrespective of the reporting obligation under forms 720 and 721.
- Executive remuneration. Incentive plans, stock options, remuneration in kind or payments through interposed companies whose tax treatment is debatable.
- Corporate structures. The use of interposed persons or entities, fiduciary arrangements or zero-tax territories that conceal the identity of the real taxpayer also triggers the aggravated offence under Article 305 bis.
The automatic exchange of financial information between tax authorities (the OECD Common Reporting Standard and the EU directives on administrative cooperation) has sharply reduced the likelihood that such situations remain hidden. The question is no longer so much whether the tax authorities will find out, but when.
Legal entities can be held criminally liable for these offences under Article 310 bis, and regularisation by the entity has the same effects.
When the notification has already arrived
Once the start of proceedings has been notified, paying the debt no longer prevents the offence. The law then offers ways to reduce the penalty, not to exclude the offence.
Article 305.6 allows the court to impose a penalty one or two degrees lower on a taxpayer who pays the debt and admits the facts in court within two months of being summoned as a suspect (investigado). The same provision extends the reduction to other participants who actively cooperate in obtaining decisive evidence, in identifying other offenders or in tracing the taxpayer’s assets. The general mitigating circumstance of reparation of harm under Article 21.5 of the Criminal Code also remains available.
The difference from regularisation is substantial: in one case the penalty is reduced; in the other, there is no offence. In addition, since the 2012 reform, Article 305.5 allows the tax authorities to assess and continue collecting the debt while criminal proceedings are pending, unless the court orders a suspension. Criminal proceedings no longer bring the tax side to a halt.
Conclusion: review your situation before they write to you
Regularisation under Article 305.4 is one of the few institutions of Spanish economic criminal law in which the outcome depends almost entirely on an early decision by the person concerned. Before notification, full regularisation removes the offence and the related instrumental forgery. After it, the best one can hope for is a reduced sentence.
For executives with complex remuneration schemes and for foreign residents with accounts or assets outside Spain, the recommendation is clear: review your tax situation for the years that are not yet time-barred for criminal purposes, quantify any potential exposure per tax and period, and regularise where appropriate.
