Tax control plan for 2019

The new Guidelines of the Annual Tax Control Plan of the year 2019, revolve around four main pillars: information and assistance, prevention of non-compliances; the investigation and verification of tax and customs fraud, the promotion of voluntary compliance and the prevention of fraud; the control of fraud in the collection phase; and the collaboration between the AEAT and the tax administrations of the Autonomous Communities.

Annual tax control plan for 2019

For this 2019, the actions developed in previous years are reinforced and new ones are incorporated, in line with the economic, social and regulatory context in which the Tax Agency (AEAT) develops its activity.

Information and assistance. Prevention of non-compliance

In order to enhance the diversity and quality of information and assistance services, the Tax Agency (AEAT) aims to develop a new model of assistance to taxpayers, promoting voluntary compliance with tax obligations, which will materialize in the following actions:

1. Promotion of the channels of assistance to the taxpayer by electronic and telephone means, as well as the use of forms for the preparation of returns and means of identification.
2. Ensure the correct functioning of the new assistance tool, implemented in 2018, the Virtual Assistant of the Immediate Information System (SII) and continue the development of the Virtual VAT Assistant “AVIVA”.
3. Advance in the provision of tax data to the taxpayer, in particular in the field of VAT.
4. Assistance in the Income Tax campaign through the Renta WEB service and Renta WEB telephone.
5. Strengthening and improving VATinformation services.
6. Maintenance of the inclusion of noticesin the personal income tax data document.
7. Improve the actions of census control and elaboration of a system of help for the preparation of the return by the taxpayer.

Investigation and verification of tax and customs fraud. Promoting voluntary compliance and fraud prevention

1. New sources of information and technological advances in risk analysis

In this line, the following actionsstand out:

• the incorporation into the databases of the Tax Administration of all the invoicing issued and received by the entities integrated in the SII;
• the generalization of the automatic exchange of information on financial accounts abroad owned by residents in Spain (CRS Project);
• in relation to multinational groups, the increase in the information available as a result of the exchange of information known as the ‘Country-by-Country Report’.

In addition, during 2019 a new reporting obligation will be implemented, under DAC 6, for disclosure of aggressive planning mechanisms and other techniques for concealing the ownership of income and assets.

2. Control of internal taxes.

A. Multinational groups and large companies. The Tax Agency will pay particular attention to the analysis of the actions carried out by companies and groups in those areas that have been considered as of greater risk with attention to the following areas:

• anti-circumvention measures;
• transfer pricing;
• permanent establishments; and
• tax havens and privileged or opaque jurisdictions.

B. Asset analysis. Information analysis and investigation actions aimed at the detection of assets, hidden rights and undeclared income will be promoted. Throughout 2019:

1. The number of taxpayers proposed for inspection will be expanded.
2. The necessary actions will be carried out to process and exploit the information received by supply from the different countries and jurisdictions.
3. The objective is to successfully ensure the effective implementation of the CRS in Spain, a fundamental element on which the information exchange system and fiscal transparency are based.

C. Concealment of business or professional activities and abusive use of companies. Throughout 2019, the implementation of a coordinated strategy to combat the concealment of income will be maintained, reiterating the following priority lines of verification:

1. The presence of the Tax Agency will be increased in those sectors and business models in which the levels of the black economy stand out for a special social perception about their own existence.
2. The personage will be increased in the headquarters where the economic activity is carried out in an effective way.
3. Control actions will be carried out in those activities in which an intensive presence of final consumersis detected, thus avoiding a lack of effective impact of VAT.
4. The existence of companies lacking a real productive structure will be verified.
5. Verification actions will be carried out with respect to taxpayers who have been subject to tax regularizations
6. Actions will be established aimed at preventing the abusive use of legal entities with the sole purpose of channeling income to natural persons by inappropriately reducing the applicable tax rates.
7. There will be an increase in the analysis of assumptions of companies linked to a person or family group.

D. Analysis of new business models. In 2019, the lines of research initiated in previous years will continue and new ones will be incorporated. in particular:

• studies of FINTECH technologies;
• actions on new distribution models;
• analysis and study of new payment models for their control;
• control actions over those manufacturers or service providers that market their goods or services through the Internet;
• analysis and exploitation of the information required of intermediaries in operations carried out with cryptocurrencies and that provided by third parties on the holding and operations with virtual currencies.

E. Other performances

1. Relating to vat control.
2. Relating to the existence of VAT frames. With regard to the 2019 financial year, it includes as a special monitoring object the following operations:
   • a) Support of the preventive control measures of the Registry of Intra-Community Operators (ROI).
   • b) Control of the census of entities.
   • c) Control of VAT fraud plots in intra-Community transactions and in those directly linked to the first deliveries after imports relating to electronic material and components not covered by the taxable person’s investment.
   • (d) Control of intra-Community VAT fraud plots operating in the vehicle sector.
   • (e) Combined verification and investigation of imports of consumer products, textiles and other products of Asian origin.
   • (f) Control of active plots in the hydrocarbons sector.
   • (g) Control over tax warehouses and non-customs warehouses.
   • h) Control of the refund of vat paid on purchases of goods made by travellers not resident in the TAI.
3. Relating to the control of the IS. In 2019, the control actions will target activities with very low activity. Joint actions of the Management and Inspection areas will be carried out on this group.
4. Control actions on tax groups and entities. The priority areas for action shall be, inter alia:
   • a) As regards the INCOME of tax groups, particular attention will be paid to the offsetting of negative tax bases from previous years.
   • b) Use of the information provided by the SII for a special control of taxpayers integrated in the groups that apply the regime of the group of VAT entities.
5. Relating to the control and updating of census information,in line with OECD projects,“Right from the start”,and early controls of access to the census through the use of the online TGVI of information statements.
6. In order to ensure that the implementation of economic measures fulfilsits task and to step up the fight against fraud.
7. Other control actions on compliance with internal regulations. In addition, the following actions will be carried out:
   • a) Intensification of the control of non-filing taxpayers of Personal Income Tax.
   • b) Consolidation of the tools of analysis of books records of VAT non SII and economic activities in the Personal Income Tax.
   • c) Improvement in the control of personal income tax with respect to returns on real estate capital.
   • (d) Development of a retention control tool.
   • (e) Centralization of testing activities in relation to IRNR and DSIS.
   • f) Detection of abusive corporate forms.
   • (g) Collaboration with the Labour and Social Security Inspectorate.

3. Control of customs fraud, excise and environmental taxes

A. Prevention and control of customs fraud. During 2019, the priority lines of action to be carried out will be the following:

1. Control in customs precincts.
2. Verification and re-evaluation of customs authorizations.
3. Control of customs authorizations.
4. Post-import controls.
5. Other performances:
   • aimed at preventing fraud in the field of foreign trade;
   • combined verification and investigation of imports of consumer products, textiles and other products of Asian origin;
   • control over tax warehouses and warehouses other than customs warehouses

B. Prevention and control of fraud of products subject to IIEE. In this area, controls on excise duties on manufacturing, on hydrocarbons, on electricity, on coal and on certain means of transport will be strengthened. The control of products subject to the IIEE and the control of active plots in the hydrocarbons sector.

C. Prevention and control of environmental tax fraud. Controls are established in relation to the Tax on Fluorinated Greenhouse Gases and the Tax on the Value of Electricity Production.

Likewise, the verification of compliance with the tax obligations derived from the Taxes on the Production of Spent Nuclear Fuel and Radioactive Waste resulting from the generation of nuclear power, and on the storage of spent nuclear fuel and radioactive waste in centralized facilities, with special emphasis on the verification of compliance with the formal obligations derived from these taxes, will be promoted.

4. Prevention and suppression of smuggling, drug trafficking and money laundering

In 2019, the AEAT will continue with its work of prevention and repression and, among others, the following actions will be developed:

• (a) With regard to the illicit trade in tobacco,controls by sea shall be strengthened. A new instrument for combating tobacco products will be incorporated with the entry into force of the European legislation on the traceability of tobacco products.
• (b) With regard to drug trafficking,action will be strengthened to detect new psychoactive substances as well as to prevent trafficking in cocaine.
• (c) In the area of the Strait of Gibraltar, control actions will be strengthened, including regulatory measures aimed at limiting the use of high-speed vessels.
• (d) The fight against the introduction of narcotic substances through methods such asdrop-offwill be stepped up at the various seaports.
• (e) Risk analysis and investigation activities relating to illicit trafficking affecting global security or of citizens and the environment will be strengthened.
• (f) Advanced actions in the field of analysis and selection of candidates for investigation into money laundering will be encouraged.
• g) The use by the tax agency’s research units of new technologies for the collection and analysis of information in all types of networks will be enhanced in order to avoid the use by the Deep internet organized crime, or «deep dark web», for the trafficking and trade of all kinds of illicit goods.

Control of fraud in fas

and collection

The development of the following lines of action in the different phases of the collection procedure is proposed.

1. Measures to prevent and control tax fraud:

• Improvements in the assessment of collection risk through a new computer tool that will make a definition of collection risks.
• Adoption of derivations of responsibility. It will continue with the investigation actions aimed at identifying third parties responsible for the debts and prove the concurrence of the factual assumptions provided for by the rule to demand payment of the debt.
• Adoption of precautionary measures.
• Prosecution of crime against the Public Treasury and smuggling. Special monitoring of the assets of these debtors must be carried out in order to prevent and detect conduct of asset emptying. Special attention will be paid to the conduct of those convicted of crimes against the Public Treasury and smuggling.
• Follow-up of apparent insolvencies. The involvement of debtors in the creation of successive commercial companies that fail to pay their current tax obligations should be investigated and failed debtors monitored.
• Cooperation with other Public Administrations. It is planned to implement the cooperation mechanism called Punto Neutro and its regulation via Royal Decree.

2. Other revenue management measures

The aim is to speed up and promote the collection procedure by means of review campaigns. It also seeks to optimize resources and improve procedures in the field of revenue management. To this end, controls are provided:

1. On the policy of postponements. Provision is made for the risk analysis of the financial solvency of applicants for deferral by means of a computerised medium, as well as for the review of the adequacy of the guarantees affected by the deferrals granted.
2. On the outstanding debt in the executive period. In particular, the debt in the embargo phase, promoting actions that lead to a reduction of the same.
3. On debts suspended and paralyzed by appeal or claim.
4. Of public entities,continuing with the review and purification of the census of these entities in order to expedite and increase the collection of debts at their expense.
5. On procedures of alienation,nationalizing the competences of the auction table in order to manage in a uniform way the awards and optimize the resources of the AEAT.

Collaboration between the AEAT and the Tax Administrations of the Autonomous Communities

to​. Exchanges of information

1. Exchanges of information will continue:
   • on the most relevant census data of taxpayers through the Shared Single Census.
   • of the amounts owed to the Tax Administrations for the improvement of the collection management
   • of the information of thenumerous f amilias and of the degrees of disability of the CC.AA to the AEAT.
   • obtained in the control procedures developed by each of them that is relevant for the taxation by other tax figures managed by another Administration.
2. The periodic transmission to the Tax Agency of the information contained in tax returns corresponding to ceded taxes managed by the Communities will be encouraged.
3. The transmission by the Autonomous Communities of information on:
   • the real values of transfer of goods and rights in the ITP and AJD and in the ISD that have been verified by the regional tax administrations in the course of control procedures.
   • the constitution of annuities, operations of dissolution of companies and reduction of the share capital with attribution of assets or rights of the company to its partners, loans between individuals and budgetary payments before their realization, in order to proceed to the attachment of the corresponding right of credit in case the creditor maintains outstanding debts with the AEAT.
4. Exchanges of specific information on certain facts, operations, securities, goods or income with tax significance that are relevant to the tax management of any of the Administrations, especially for the fight against fraud, will be enhanced.

B. Coordinated planning and collaboration in the selection of taxpayers to be subject to control actions

In this area, we highlight:

1. Global control of the deductions on the regional section of personal income tax,approved by the different AUTONOMOUS COMMUNITIES.
2. Use of the information sent by the AUTONOMOUS COMMUNITIES on disability and large family matters for the control of taxation in personal income tax.
3. IP corresponding to non-prescribed periods and their relationship with DSD, through the crossing of information on the ownership of goods and rights, including those located abroad, and the identification of non-filer taxpayers of said tax who are obliged to file a return.
4. Significant real estate transactions in order to determine their taxation by vat tax or, alternatively, by the concept “Onerous Property Transfers” of the ITP and AJD.
5. Most relevant corporate transactions not subject to ITP and AJD because they have benefited from the special regime of mergers, divisions, contributions of assets, exchanges of securities and change of address.
6. Compliance with the requirements to enjoy certain tax benefits in the DSD.
7. Compliance with the requirements for the application of the tax regime for cooperatives.
8. Declared addresses and their modifications.
9. Verification of the requirements for the enjoyment of the exemption or bonus of the Special Tax on Certain Means of Transport for the acquisition of vehicles by disabled people and large families.

Lastly, as far as the Foral Communities are concerned, they include among their essential principles those of coordination and mutual collaboration between those Communities and the State in the application of their respective tax regimes. The fundamental line of collaboration will be constituted by the exchange of the necessary information.

Information on transactions carried out by those obliged to send their billing records through the SIIwill also be exchanged when the information received is of interest to another tax administration.

Tax control plan: elaboration

The Tax Administration has the obligation to prepare annually

a Tax Control Plan, which is reserved without prejudice to making public the general criteria that inform it through its publication in the BOE.

The Tax Control Plan is the main mechani

smo of annual planning in which the actions to be developed in the field of tax control are established. saying
control,
understood in a broad sense, includes from the activity of verification of less complex breaches to the activity of investigation, discovery and repression of the most sophisticated forms of fraud, as well as those that have as their purpose the collection of tax debts not paid voluntarily.

Within the scope of the Tax Agency,

the Tax Control Plan affects the different functional areas

integrated into it, dedicated to the control of the tax system (Financial and Tax Inspection, Customs and Special Taxes, Tax Management and Collection).

If you have any questions or need any clarification about this tax control plan, you can contact any of our advisors to help you resolve it.