Law 7/2012, of October 29, amending tax and budgetary regulations and financial regulations to intensify actions in the prevention and fight against fraud

OFFICIAL STATE BULLETIN No. 261 Tuesday, October 30, 2012 Sec. I. Page 76259 I. GENERAL PROVISIONS HEAD OF STATE 13416 Law 7/2012, of October 29, amending tax and budgetary regulations and adapting financial regulations to intensify actions in the prevention and fight against fraud. JUAN CARLOS I KING OF SPAIN To all who see and understand this present document: Know that the General Courts have approved and I hereby sanction the following law. STATEMENT OF MOTIVES I This Law contains a series of measures aimed at the prevention and fight against tax fraud. The social and economic reality in a scenario of crisis and budgetary austerity makes tax fraud today, if anything, more reprehensible than ever. At the same time, the evolution of fraudulent behaviors and the accumulated experience in the application of tax regulations, following the entry into force of Law 58/2003, of December 17, General Tax Law, allow for a reform with sufficient perspective to place our legal system at the forefront of the fight against fraud. These objectives are pursued with a battery of novel measures designed to impact directly on niches of fraud detected as the origin of significant deductions in public revenues, but also with other measures that tend to perfect the rules that guarantee the tax credit in order to update them or clarify their correct interpretation with the aim of increasing the legal certainty of our tax system and avoiding unnecessary litigation. A system that is more technically coherent and more predictable contributes to achieving greater effectiveness and less litigation, which, in turn, allows releasing resources to achieve greater control of potential evasions. Finally, it is worth highlighting a series of measures incorporated into the legal system in a novel way and with a clear vocation in the fight against fraud, among them the possibility of adopting precautionary measures linked to cases of alleged crimes against the Public Treasury, as well as the associated patrimonial investigation, the limitation of cash payments, or the establishment of new information obligations regarding assets and rights located abroad. II The act of defrauding the Public Treasury consisting of distributing existing assets, once the debt has arisen, to partners through pre-assessment operations, to make way for a formal assessment with an insignificant, if not non-existent, quota, makes it advisable to increase for these purposes the value of the successor partner's quota in the tax debt that operates as the limit of their liability. To this end, the scope of the limit of the liability of said partner in the tax debt of dissolved or liquidated legal entities or entities that limit the patrimonial liability of partners is expressly regulated, both in the succession of the tax debt and of sanctions, if applicable. Likewise, it is appropriate to modify the system of succession of entities with legal personality, to provide legal coverage in the Law for the succession of public-law entities, in which the traditional commercial subrogation also occurs. For this purpose, all kinds of societies and entities with legal personality that had the status of successors and beneficiaries are explicitly included as susceptible to tax succession. On the other hand, the reform aims to clarify the implications derived from the legal nature of the tax responsible party, who should not be identified with an infringing subject, but as a tax obligor in the strict sense, even if they also respond to the tax sanctions imposed on said infringing subject. Among the modifications that seek to signify such a legal situation, within the sanctioning legal regime, a system of reduction of sanctions to be imposed for compliance and early payment is established. In relation to the compliance reduction, in the event of a concurrence of a situation of responsibility regarding the sanction, the rule is modified to offer the responsible party the possibility of giving their compliance with the part of the debt derived from a sanction in the seat of the main debtor and benefiting from the legal reduction for compliance. Likewise, the responsible party is recognized the eventual reduction for early payment of their own debt. A new case of subsidiary liability is introduced, intended to facilitate the collection action against the administrators of those companies that, lacking assets, but with regular economic activity, carry out a recurrent and systematic activity of filing self-assessments formally but without payment for certain tax concepts with fraudulent intent. The possibility of deferrals or installments of credits against the mass in bankruptcy situations is eliminated to avoid the artificial postponement of public credit as a consequence of the mere request for deferral or installment. The wording of the rule is improved in determining the dies a quo of the start of the computation of the limitation periods in those cases of joint liability where the enabling fact for appreciating the same occurs after the day following the end of the voluntary period of the main debtor. In addition, the legal regime regulating the interruption of the computation of the limitation period of the Administration's right to determine the tax debt through the appropriate assessment is clarified with respect to certain tax obligations when the Administration's action is originally directed towards another distinct tax obligation as a consequence of the presentation of an incorrect declaration by the tax obligor. On the other hand, the moment when the limitation period interrupted by the declaration of bankruptcy is restarted is modified so that it coincides with the moment when the Administration recovers its faculties of executive self-protection, introducing a strictly technical improvement to provide legal certainty to the relations of the Public Treasury with bankrupt debtors. Likewise, the effects of the suspension of the computation of the limitation period due to litigation, bankruptcy, and other legal causes are clarified, explicitly stating that the effects of such suspension extend to all tax obligors. Regarding precautionary measures, the provision is modified to allow their adoption at any time during the procedure when it is estimated, if applicable, the concurrence of the circumstances established in the provision itself. On the other hand, and since practice and the analysis of results show that it is necessary to adopt measures that allow facilitating the Judge's exercise of their jurisdictional function, allowing them to make decisions in the scope of precautionary measures based on prior investigative work accompanied by an assessment by the bodies of the Tax Agency of why the circumstances that, in their opinion, determine the convenience of adopting a precautionary measure exist, the rule is modified in such a sense, with the aim of advancing in the fight against aggravated fraud, proposing, first of all, the modification of precautionary measures in files for tax crimes, considering their character as exceptional and provisional measures that only seek to subject the blocking of a patrimonium whose availability, as a result of the criminal process, is questioned by virtue of the accredited facts that allow the adoption of the administrative precautionary measure, it being emphasized that the possibility of adopting precautionary measures also extends to other cases where the judicial investigation does not originate in verification and investigation actions developed by the Tax Administration. The modification is complemented, to provide greater legal certainty to the action of the Public Treasury, with a legal mandate to the Tax Agency for the patrimonial investigation of the subjects affected or related to a process for a crime against the Public Treasury. In addition, to combat certain fraudulent behaviors in the collection sector consisting of the depatrimonialization of a company, the disposal of real estate assets of companies whose shares or participations had been subject to attachment and effective control of the company in question was exercised by the holder thereof, a debtor of the Public Treasury, is prohibited. The legal regime of the attachment of assets and rights in credit and deposit entities is modified to increase their effectiveness and legal certainty. To this end, the extension of attachment to other assets or rights not identified in the attachment diligence may extend to the rest of the assets and rights held by the person or entity and not only from the office or branch to which the attachment was sent. In concordance with this, due to territorial jurisdiction limitations of the acting Tax Administration, this scope is established as the limit of the extension. When a tax obligor fails to comply with the obligation of telematic presentation, it notably hinders the Administration's treatment of information and the generation, if applicable, of the corresponding debts. However, no specific tax infringement case is typified that penalizes their behavior against the taxpayer who adheres to such an obligation. Therefore, it is considered necessary to create a new type of tax infringement related to the presentation of self-assessments or information declarations without adhering to the telematic presentation obligations, which will carry fixed sanctions in the case of self-assessments and variable sanctions depending on the number of data in the case of information declarations. In view of the accumulated experience regarding the application of the infringement for resistance, obstruction, excuse, or refusal to the actions of the Tax Administration, its modification is considered appropriate to avoid various detected problems as well as improve its deterrent effect and prevent these defects from allowing the dilution of procedures. To favor the operability of non-pecuniary sanctions, the deadline to initiate sanctioning procedures for the imposition of these sanctions is modified. Thus, the three months are counted from when the act of imposing the pecuniary sanction linked to the eventual imposition of the non-pecuniary sanction had been notified or deemed notified. The system of suspension and accrual of late interest in the case of appeal or claim against the agreements deriving responsibility is clarified. Thus, generally, if the sanction is appealed by both the main debtor and the responsible party, the execution of the sanction will be suspended and late interest will cease to accrue for the period of time elapsed until the end of the voluntary period opened by the notification of the resolution ending the administrative route. However, in the cases of joint liability of article 42.2 of Law 58/2003, of December 17, General Tax Law, the aforementioned measures of suspension of execution and non-accrual of interest will not apply, given the legal premise of said responsibility. The amount of the guarantee that must be deposited for the suspension of the execution of the impugned act through the appeal of reconsideration or the economic-administrative claim is modified, in order for the amount thereof to cover all surcharges that could be exigible at the moment of execution of the guarantee of the public credit. OFFICIAL STATE BULLETIN No. 261 Tuesday, October 30, 2012 Sec. I. Page 76260 cve: BOE-A-2012-13416

The globalization of economic activity in general, and financial in particular, as well as the freedom in the circulation of capital, along with the reproduction of fraudulent behaviors that take advantage of these circumstances, make it advisable to establish a specific information obligation regarding assets and rights located abroad. In this way, through an additional provision incorporated into the General Tax Law, this information obligation is established, as well as the regulatory authorization for its development. The obligation is completed with the establishment in said provision of the sanctioning regime in case of non-compliance with the obligation. On the other hand, in order to achieve better protection of public credit, regardless of its tax or other nature, the joint liability of article 42.2 of Law 58/2003, of December 17, General Tax Law, is extended to the generality of public credits through the corresponding modification of Law 47/2003, of November 26, General Budgetary Law. III In connection with what was mentioned above regarding the globalization of economic activity and the need to obtain information on assets and rights located abroad, and as a necessary complement to the same, a modification of the rules of the Personal Income Tax and the Corporate Tax is introduced, to regulate the incidence that in the scope of unjustified capital gains and the presumption of obtaining income, respectively, the non-presentation within the deadline of such information obligation may have, introducing, in addition, a specific infringement, with an aggravation of the sanctions, for these cases in which the tax obligors did not consign in their self-assessments the incomes that are subject to regularization as unjustified capital gains or presumably obtained. Additionally, new cases of exclusion from the objective estimation method in the Personal Income Tax are established, whereby taxpayers who carry out certain activities and the volume of the gross yields of the immediately preceding year corresponding to the same from obligors to practice withholding or payment on account exceeds a certain amount will be excluded from said method, and, therefore, also from the special simplified regime of the Value Added Tax. IV The experience of the Personal Income Tax campaigns with the draft declaration service and the satisfactory reception of the Internet service through an SMS, makes it advisable to modify the regulatory framework of the former to update the profile of the taxpayer recipient of the draft declaration. Specifically, the delimitation of the draft profile is deslegalized, so that the annual ministerial order of said campaign can adapt it to normative modifications, service management modifications, etc., enabling a greater degree of flexibility that allows progressively extending this service to a greater number of taxpayers without the need to proceed to continuous modifications of the legal norm regulating the Tax. V With respect to the Value Added Tax, a series of modifications are incorporated into the Tax Law in order to avoid fraudulent behaviors, especially in real estate delivery operations and in situations where a declaration of bankruptcy has occurred. First of all, two new cases of reverse charge are established in the aforementioned real estate delivery cases. On the one hand, when the exemption is waived, and, secondly, when the delivery of the real estate goods occurs in execution of the guarantee constituted on them, a case that is expressly extended to operations of giving the property in payment and when the acquirer assumes the obligation to extinguish the guaranteed debt. These cases of reverse charge adjust to what is established in Council Directive 2006/112/EC, of November 28, 2006, on the common system of value added tax. With this, it is intended to avoid the harm that occurs to the Public Treasury when VAT is not paid to the Treasury, and subsequently, the deferral is requested or the bankruptcy of the transmitting entity is declared. The damage to the Public Treasury is double, as the unpaid VAT is deducted by the acquirer. With the mechanism of the reverse charge, the payment of VAT to the Public Treasury is guaranteed. Secondly, the situation of bankruptcy of the tax obligor requires a particular treatment in the Tax with the aim of facilitating its management and preventing neutrality from being altered to the detriment of the Public Treasury. In cases where the order declaring bankruptcy is issued during the liquidation period of the Tax, it is necessary to differentiate whether the credits are bankruptcy credits or credits against the mass, since, according to the jurisprudence of the Supreme Court, VAT credits for taxable events prior to the declaration of bankruptcy must be qualified as bankruptcy credits. As in the current regulation the declaration-assessment is unique, it is established, in order to determine the credit that will have bankruptcy character, the obligation to present two declaration-assessments, one for the taxable events prior to the declaration of bankruptcy and another for those subsequent, in the terms that will be developed regulatory. In the first of these declarations, the bankrupt will be obliged to apply the entirety of the balances to compensate corresponding to liquidation periods prior to the declaration of bankruptcy. The measures adopted aim to guarantee the neutrality of the Tax, which has the effect that the Administration is not prejudiced in relation to the perception of the Value Added Tax as a consequence of the bankruptcy, hence the right of deduction that must be exercised, when the quotas had been borne prior to the order declaring bankruptcy, is limited to the declaration-assessment corresponding to the period in which said quotas were borne. Likewise, to adapt the management of the tax to the jurisprudential doctrine, the rectification of deductions as a consequence of the declaration of bankruptcy must be carried out in the declaration-assessment corresponding to the period in which the deduction was exercised. A new case of rectification of charged quotas is introduced for cases where the taxed operation becomes ineffective as a consequence of the exercise of a bankruptcy reintegration action or other impugnment actions exercised within the bankruptcy. In these cases, the subject liable must proceed to the rectification in the declaration-assessment corresponding to the period in which the operation was declared. The reduction of deductions by the acquirer, if they were also in a situation of bankruptcy, will be carried out, likewise, in the declaration-assessment corresponding to the period in which the deduction was exercised. With these measures, it is intended to prevent the eventual declaration of bankruptcy, whether of the transmitter or the acquirer, from distorting the neutrality of the Tax. Finally, a new case of tax infringement and its corresponding sanctioning regime is regulated for non-compliance regarding the correct declaration of certain operations assimilated to imports. Given the numerous modifications of the Value Added Tax Law that are incorporated in this Law, it is considered appropriate that these modifications be incorporated, likewise, into the Law of the General Indirect Tax of the Canary Islands so that the regime is uniform throughout the territory of the State. OFFICIAL STATE BULLETIN No. 261 Tuesday, October 30, 2012 Sec. I. Page 76261 cve: BOE-A-2012-13416

VI The use of cash payment methods in economic operations notably facilitates fraudulent behaviors, in their various manifestations. It favors the opacity of operations and activities and their concealment from the Administration. Against such behaviors, the action of public powers must be directed not only to the detection and regularization of non-compliance, but also to prevent these non-compliances from occurring, emphasizing the deterrent aspects of the fight against fraud. The use of cash and its relationship with fraud also constitutes a generalized concern in countries in our environment, where limitations on the use of cash for certain economic operations have already been adopted. In Spanish regulations, the reaction measures to this situation have focused mainly on the establishment of information obligations, as well as on the adoption of action plans in the scope of the control of the Tax Administration. The adoption of measures aimed at limiting the use of cash as a payment method, which by their nature require regulatory development with the rank of law, is considered necessary. In this context, this Law establishes limitations on the use of cash in certain economic transactions because the fight against tax fraud is a matter of public interest that prevails over the effect of the limitations regulated in this Law. Such limitation is not incompatible with the status of legal tender of banknotes and coins as there are other legal means of payment for the settlement of monetary debts. Thus, a general limitation is established on cash payments corresponding to operations from 2,500 euros. Payments made when none of the interveners in the operation act as a businessman or professional are excluded from the limitation, as well as payments or deposits made in credit entities. Likewise, a rule against the fragmentation of operations for the calculation of the legally established limit is expressly contemplated. Linked to this limitation, a sanctioning regime is established. In this sense, the regime of infringements and sanctions, the basic rules of the sanctioning procedure, and the competent body for the collection of sanctions are regulated. The exemption of responsibility in case of denunciation of the possible payment made in violation of the legal limitation is introduced. Additionally, information obligations are introduced for any authority or official who in the exercise of their functions detects payments in violation of the limitation, to report them to the Tax Agency. OFFICIAL STATE BULLETIN No. 261 Tuesday, October 30, 2012 Sec. I. Page 76262 cve: BOE-A-2012-13416

The Tax Agency will publish the list of entities and persons subject to the obligation to issue invoices or receipts, as well as the list of operations subject to the limitation on cash payments. The limitation on cash payments will not apply to payments made through credit or debit cards, checks, or other financial instruments that allow for the traceability of the payment. The sanctioning regime for the violation of the limitation on cash payments will be regulated by Royal Decree, establishing the types of infringements, the corresponding sanctions, and the procedure for their imposition. The sanctions for violations of the limitation on cash payments will be classified as minor, serious, and very serious, depending on the amount of the operation and the circumstances of the infringement. Minor infringements will be sanctioned with fines ranging from 100 to 1,000 euros. Serious infringements will be sanctioned with fines ranging from 1,001 to 10,000 euros. Very serious infringements will be sanctioned with fines ranging from 10,001 to 50,000 euros, or up to twice the amount of the operation in case of recidivism. The Tax Agency will have the power to inspect and verify compliance with the limitation on cash payments, and may request information and documents from taxpayers and third parties. Taxpayers who fail to comply with the information obligations regarding cash payments will be subject to the corresponding sanctions. The provisions of this Law will enter into force on January 1, 2013. OFFICIAL STATE BULLETIN No. 261 Tuesday, October 30, 2012 Sec. I. Page 76263 cve: BOE-A-2012-13416

This Law is published in the Official State Bulletin, and shall enter into force on the day following its publication. Madrid, October 29, 2012. JUAN CARLOS R. The Prime Minister, MARIANO RAJOY BREY. OFFICIAL STATE BULLETIN No. 261 Tuesday, October 30, 2012 Sec. I. Page 76264 cve: BOE-A-2012-13416