Hacienda comes up with 50 measures to stop property fraud
J. A. Bravo
It will be compulsory for the title deed for property to state the method of payment
Tax residence will be considered to be Spain if most of one’s assets are here
Investment in property on the Costa del Sol is under the microscope. The vast expansion in building work on the coast has had a “knock-on effect” and flats and villas are being grabbed as a method of laundering black money, as evidenced by the recent arrest of three Malaga lawyers on charges of being involved in illegal operations of this nature.
Hacienda (the Ministry of Finance and Taxation) wants to put a stop to this situation by sending inspectors out into the field.
They will be equipped with a list of 50 specific measures for the real estate sector and armed with a total of 300 new measures to combat financial fraud in general.
The Secretary of State for Hacienda, Miguel ángel Fernández Ordóñez, announced this new plan of measures on Tuesday. It will even require a change in several regulations. For instance, it will be compulsory to state the way that payment is being made in a property transaction, sums will be withheld in specific cases to prevent forgeries and a closer watch will be kept on the flow of funds to tax havens.
The aims of the Plan for the Prevention of Fiscal Fraud, drawn up by the Government, are not in themselves very different from previous ones but the way that they are implemented is distinct.
Part of this “change of strategy” for 2005, as Fernández Ordóñez defined it, is the search of “new sources of information”. According to experts in the subject, in practice this translates as developing the role of future “informers”, although it has not yet been established what rewards they will receive for providing useful, reliable information. Thus, overall inspection and money-collection units will be created which will allow precautionary measures to be taken right from the start of an investigation for clearing a tax debt. The plan, which has been known in outline for several months, centres on five main areas: property fraud, fraud in the payment of IVA (VAT) tax, the issuing of false invoices, tax havens and the laundering of capital.
In the case of real estate it will be obligatory to state the method of payment in the title deed and other relevant contracts. There will also be greater control over letting - in order to check exactly how many flats and business premises are really empty - and the reclassification of land will also be checked.
As far as VAT fraud is concerned the responsibility will be extended to the purchaser, seller and the distributor of the goods, and a close watch will be kept on inactive companies, used as a cover-up for fraudulent operations. In the case of issuing fraudulent invoices this is considered to be a “lesser” offence.
So called “tax engineering” will also be the subject of special attention. The Government wants to change the law so that a tax-payer who is officially resident in a tax haven is presumed to really live in Spain - for tax purposes - if the greater part of his or her assets are here. This is the situation of certain financiers, sportsmen and women and artists.
Finally to combat the laundering of capital, any suspicious export of funds will be followed up and exceptionally luxurious homes will be investigated in situ.
