Spanish banks are obliged by law to inform the Hacienda or la Agencia Tributaria (Spain's tax office) about certain types of transactions and payments above a certain amount or of a certain type.
This is a way that the Spanish taxman keeps an eye on your financial movements, in order to clamp down on tax evasion and fraud and other financial irregularities.
Since the establishment of Spanish Law 7/2012, banks must inform Hacienda about any suspicious activity in your account.
Spanish tax law outlines "the obligation of these [banking or financial] entities to provide the government with all types of information with tax implications relating to their economic, professional or financial relations with other persons", according to the Bank of Spain.
READ ALSO:
- How does Spain know if I'm a tax resident?
- How much money can I give someone in Spain without it being taxed or declaring it?
Depending on the amount and origin of the money, the tax office may decide to dig a little deeper into your financial affairs and open an official investigation, or they may not.
What are the transactions Spanish banks flag?
- Operations carried out with €500 banknotes. Two fairly recent rulings by the Spanish Supreme Court (in 2013 and 2014) established that banks must report operations in which one or more €500 banknote is used, and that Hacienda can request further banking data on the person in question.
- Cash income of more than €3,000. Banks are also obliged to report deposits made in cash (whether in coins or banknotes) when it is more than €3,000, regardless of whether the deposit was done in the bank branch at an ATMs.
- Credits and loans worth more than €6,000. Royal Decree 1065/2007 establishes that bank must also inform the Hacienda of any credit lines or loans of any amount greater than €6,000, and provide the name or company name and tax identification number of the creditor and borrower.
- Recurring income. Receiving recurring periodic amounts into your account, regardless of the amount of them, also triggers this practice. For this reason, it is generally recommended that payments are made by bank transfer, since that way the Hacienda can easily identify the payer and where the money is coming from.
- Transactions exceeding €10,000. Spanish banks also report any transactions exceed €10,000 in value, including income, deposits, cash withdrawals, bank transfers or wires.
- Large deposits or transfers. If the income exceeds €10,000 from outside Spain or €100,000 within the country, you are supposed to declare this before the transaction is completed using the S1 form, which you can find here, and if not the information will likely be deemed suspicious and sent to the Hacienda.
Many of these types of transactions or movements are automatically sent by banks to the tax office. If they are suspicious enough, the Spanish tax office can request further information about your financial movements at any time if it suspects that the origin of the money in it or its movements are suspicious, and it may initiate an inspection procedure against you.
If this happens, they may send you a letter in the post requesting certain documents or clarification, and in some cases for self-employed people and businesses they send tax office employees to the person's fiscal address in what's called a visita sorpresa (surprise visit).
READ ALSO: What are Spain’s rules and limits on cash payments?
In Spain tax fraud (evasión fiscal) is considered to be minor if you don’t declare up to €3,000. In that case, you could be subject to a fine of €1,500 from the tax office.
More serious offences can land you with a fine equal to the amount in question, and for very serious cases of tax fraud even a criminal conviction and prison time.
READ ALSO: Tax evasion in Spain: What are the penalties and prison sentences
Comments