Spain to use big data to track if high earners are lying about residency

Spain to use big data to track if high earners are lying about residency
Photo: succo/Pixabay
Spain’s tax agency will use big data as a means of finding out if high earners are pretending to reside abroad for tax reasons.

A debate has been raging in Spain for the past two weeks after the country’s top Youtuber, El Rubius, announced he would be changing his residence to Andorra, a microstate on the border between Spain and France which is famed for being a tax haven. 

This is in fact a move which many wealthy Spaniards have opted for over the last few decades in a bid to enjoy the principality’s more favourable tax rates.

But the media furore El Rubius’s announcement has caused Spain’s Inland Revenue to move towards clamping down on citizens, Spaniards and foreigners alike, who reside in Spain but pretend to be fiscal residents somewhere else.

The Spanish government’s latest bulletin describes how its tax and tariffs plan for 2021 will have as one of its priorities reinforcing the tracking of these wealthy individuals who should be paying taxes in Spain.

Tax authorities will use a number of software programmes that collect big data and can ascertain whether a person spends more than 183 days a year in Spain, based on where they sign into their social media accounts, where they go to the doctor, where they use their credit cards and other data available to them.

Spain’s Hacienda agency will also factor in where the main base of the taxpayer’s earnings is and check the activity of their direct family relatives.

A number of Spanish celebrities, from former tennis player Arantxa Sánchez Vicario to opera singer Montserrat Caballé, are known to have moved their fiscal residence and fortunes to Andorra.

It is not illegal to take up residency in the Pyrenean microstate, but the ease with which high earners have up until now been able to live there on paper whilst actually residing in Spain has spurred the government to up its game.

The head of Hacienda’s technical branch Gestha, Carlos Cruzado, wants to employ between 15,000 and 17,500 civil servants by 2027 to help clamp down on tax fraud in Spain, estimating that 83 percent of the tax agency’s current workforce needs extra training in using the latest big data tools available.

Spain is losing tax contributors at record rates due to the coronavirus crisis, but even before the pandemic shook up the country’s job market, public coffers were estimated to miss out on €96 billion every year due to tax fraud. 


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