2022 Tax Control Plan: the sectors that will receive visits from the Spanish tax authorities in 2022

The Spanish tax authorities have published the 2022 Tax Control Plan (Plan de Control Tributario), which sets out the main guidelines that the Spanish Tax Agency (AEAT) will follow this year to pursue tax irregularities and improve compliance with tax obligations. Self-employed workers and small businesses will be the main targets of this control

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Below are the key lines of the 2022 tax control plan, both in terms of monitoring businesses and in terms of assistance with filing taxes.

Return of warning letters to self-employed workers and small businesses

One of the most important new developments this year will be the resumption of the traditional warning letters (cartas aviso) sent to businesses that, over a period of time, have shown certain indications of committing tax irregularities.

Through these letters, as in previous years, self-employed workers and companies will be informed of the information held by the Tax Agency that points to the existence of non-compliance risks. In this way, certain taxpayers will learn how the tax inspectorate (Inspección de Hacienda) assesses their tax behavior and may, at their own discretion, either explain that the information on which that assessment is based is incorrect or directly regularize their tax position, particularly in relation to subsequent self-assessment returns.

To carry out this action, the tax authorities will analyze several financial and economic parameters of the business, including reported accounting items and other data on the income from the activity or on the generation of cash flows outside the accounts themselves, as well as third-party indicators obtained from third parties. This is precisely what was done years ago, when self-employed workers and companies were informed that their reported turnover was well below that of their sector so that, if they saw fit, they could correct their tax behavior.

Visits to cash-intensive businesses and greater control over VAT

The traditional visit plan will continue in 2022. So much so that on-site visits to the premises where business activities are carried out will be stepped up again, to combat the unfair conduct of a very small minority of taxpayers who take advantage of the difficulty of verifying data on the actual volume of revenue. In addition, this year the Tax Agency will focus on tax registration (census) matters, including visits to so-called “company nests” (nidos de sociedades), such as those found in coworking centers and places used merely to receive mail, in order to monitor possible fraud schemes involving VAT (IVA) and other taxes.

In addition, the inspectorate will once again step up its monitoring of small businesses in sectors such as hospitality and retail, which are usually the ones that deal most in cash. Checks will therefore continue in those sectors or business models in which high levels of underground economy are observed, especially in areas where cash is the only accepted means of payment or where it may be used above the legal limit on cash transactions.

The group of potential non-filers of VAT returns subject to analysis will also be expanded and, in the context of cooperation with the Labor Inspectorate (Inspección de Trabajo), sectors with frequent subcontracting arrangements will be analyzed to verify the correct VAT and Personal Income Tax (IRPF) treatment of companies that engage purportedly self-employed workers.

Stepping up the fight against sales suppression

Furthermore, and also of importance for small businesses, in the area of controlling the underground economy the Tax Agency will step up the fight against the use of sales-suppression systems, in line with the legal prohibition established in the Anti-Fraud Law (Ley Antifraude).

E-commerce and the digital economy

In 2022, the Agency will also focus on controlling transactions carried out through e-commerce, as well as on certain areas of the digital economy itself. In other words, monitoring of businesses that operate essentially online will be increased. With regard to online sales, emphasis will again be placed on identifying, for tax purposes, companies that are not domiciled in Spain but are nonetheless required to pay VAT on their sales to Spanish consumers.

With regard to the digital economy, mechanisms will be promoted to obtain economic and commercial information that can be used in subsequent audits. Accordingly, this year the Tax Agency plans to increase its actions in those digital activities that may present a higher tax risk.

Specific actions in Corporate Income Tax

Verification work will also continue with respect to taxpayers that have repeatedly reported, in their Corporate Income Tax (IS) returns, tax losses (negative tax bases) available for offset and tax credits pending application.

Another risk, according to the tax authorities, is the improper use of tax benefits by entities that have no activity and whose main reason for existing is, precisely, to take advantage of those benefits. The focus will therefore be on businesses that serve only as vehicles for transferring tax benefits to third-party investors interested in enjoying those advantages.

Sectors most closely monitored in these inspection actions

Many businesses, especially those run by self-employed workers, may be affected by this type of action by the tax inspectorate. This is because most of these sectors deal directly with the public, that is, with the end consumer, which means that they make greater use of cash to collect payment for their services from customers than large companies do.

Specifically, the sectors at risk of being investigated most for this practice are:

• Retail trade

• Hospitality

• Agriculture

• Renovation and repair work

• Construction

• Real estate activities