Tax ofenses: an outline

At the present time, a total of 89 people are serving sentences for tax offenses in Spanish prisons. Since 2007, a total of 1,054 convictions have been handed down for crimes against the tax authorities. Only 360 non-conviction sentences have been handed down.

Given the strength of the figures and the review of crimes against the Public Treasury and against Social Security regulated in Title XIV of the Criminal Code, it is appropriate to make a brief introduction to this issue.

Besides the offenses directly related to the Public Treasury, the Criminal Code also regulates those committed against Social Security. Those committed for improperly obtaining subsidies or aid from the Public Administration. Or those committed by fraud against the general budgets of the European Union or others administered by it.

In this sense, within the tax crime regime, the basic criminal offense (Article 305 PC), punishes those conducts consisting of the evasion of the payment of taxes, amounts withheld. Or amounts that should have been withheld or deposited on account. Unduly obtaining refunds or enjoying tax benefits, when the amount of the defrauded quota exceeds 120,000 euros.

These conducts will be punished with prison sentences from 1 to 5 years and a fine of six times the amount defrauded. And the loss of the possibility of obtaining subsidies or public aid. And the right to enjoy tax or Social Security benefits or incentives. This for a period from 3 to 6 years. The same penalties are established for crimes against the European Union Treasury, for defrauded quota over 50.000€. This regulation represents a clear aggravation of the penal reaction in protection of the interests of the European Union. Compared with those of the Spanish public administrations.

In addition, the Penal Code regulates the so-called “accounting crime”. For whom, being obliged by the Tax Law to keep accounts, or tax books or records, fails to comply totally or under certain conditions.  This conduct is penalized with punishments of between 5 and 7 months.

Tax Regularization

Regarding the general regime of the crime against the Public Treasury, it is worth mentioning the following essential issues:

• The absolute exclusion of the crime when the tax situation had been a regularized. By means of the complete recognition and payment of the tax debt. Before the formal communication of the proceeding.  Or the performance of actions that allow awareness of the start of the proceeding.

As pointed out, this regularization must be previous, in that sense, the sentence of the Supreme Court of June 2, 2005:

“In addition, the disappearance of the debt after the typified facts does not imply the disappearance of the crime. The regularization produces its effects when it takes place before certain events. After these events, the payment to the Public Treasury of the amount requested before the Court as compensation. The tax liability, would suppose the extinction of the debt without affecting in any way the tax crime, consummated at the moment of the evasion. (…) The provision in paragraph 3 of being exempted from criminal liability if the tax situation is regularized. Before the Tax Administration has notified the initiation of the verification proceedings. Aimed at determining the tax debt or before a complaint or accusation is filed by the Public Prosecutor’s Office. Or the investigating Judge performs actions that allows acquiring formal knowledge of the start of the proceedings.”

• Repairing the damage caused. It is expressly contemplated the imposition of the lower penalty in one or two degrees. When in the 2 months following the judicial accusation the facts are recognized and the tax debt is satisfied.
• Non-interruption of the liquidation and collection procedure. This is a very important novelty of the last reform. It is the possibility that, during the processing of the criminal file, the defrauded quotas can be liquidated. Both those that can determine criminal liability and those that cannot. And that the Tax Administration can follow the actions tending to the collection of the debts.

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Conclusion

Consequently, this modification has been the object of the greatest criticism. For considering that it may violate the constitutional guarantee established in favor of the presumption of innocence. In any case, it raises new situations that are difficult to solve, articulating a joint action of the public administration and the criminal judge. To the detriment of the exclusive competence attributed to the latter until now. From the beginning of the processing of the criminal case.

It is interesting to note, finally, how the Penal Code regulates the penalties for all the crimes of Title XIV. When liability is attributed to a legal person, including fines of double to quadruple the amount defrauded. And the loss of the possibility of obtaining public subsidies or aid. And the right to enjoy tax or Social Security benefits or incentives for a period of 3 to 6 years. As well as the possible prohibition to contract with the Public Administrations.

If this article has been of interest, we also suggest you to read the following article published on our website: Tax Prescription.