Article 305 Spanish Criminal Code: Tax fraud

1. Whoever, by act or omission, defrauds the state, regional, provincial or local public revenue, by evading the payment of taxes, of amounts withheld or which should have been withheld or of payments on account, by improperly obtaining refunds or by enjoying tax benefits in the same manner, provided that the amount of the evaded liability, the amount not paid of the withholdings or payments on account or of the refunds or tax benefits improperly obtained or enjoyed exceeds one hundred and twenty thousand euros, shall be punished with imprisonment of one to five years and a fine of the amount of that sum up to six times that sum, unless that person has regularised the tax position on the terms of paragraph 4 of this article.

The mere filing of returns or self assessments does not exclude the fraud, where the fraud is established by other facts.

In addition to the penalties indicated, there shall be imposed upon the person responsible the loss of the possibility of obtaining public subsidies or aid and of the right to enjoy tax or social security benefits or incentives for a period of three to six years.

2. For the purposes of determining the amount mentioned in the preceding paragraph:

a) Where the matter concerns taxes, withholdings, payments on account or refunds which are periodic or subject to periodic declaration, the amount evaded in each tax or declaration period shall be taken into account, and if those periods are shorter than twelve months, the amount evaded shall be referred to the calendar year. Notwithstanding the foregoing, in cases in which the fraud is carried out within a criminal organisation or group, or by persons or entities acting under the appearance of a real economic activity without effectively carrying it on, the offence shall be prosecutable from the very moment at which the amount fixed in paragraph 1 is reached.

b) In the remaining cases, the amount shall be taken to refer to each of the different concepts in respect of which a taxable event is capable of assessment.

3. The same penalties shall be imposed upon whoever commits the conduct described in paragraph 1 and upon whoever evades the payment of any amount which is to be paid or improperly enjoys a benefit lawfully obtained, where the acts are committed against the revenue of the European Union, provided that the amount evaded exceeds one hundred thousand euros in a calendar year. Notwithstanding the foregoing, in cases in which the fraud is carried out within a criminal organisation or group, or by persons or entities acting under the appearance of a real economic activity without effectively carrying it on, the offence shall be prosecutable from the very moment at which the amount fixed in this paragraph is reached.

If the amount evaded does not exceed one hundred thousand euros but exceeds ten thousand, a penalty of imprisonment of three months to one year or a fine of the amount of that sum up to three times that sum shall be imposed, together with the loss of the possibility of obtaining public subsidies or aid and of the right to enjoy tax or social security benefits or incentives for a period of six months to two years.

4. The tax position shall be regarded as regularised where the taxpayer has proceeded to the complete acknowledgement and payment of the tax debt, before the tax administration has notified that person of the commencement of verification or investigation proceedings directed at the determination of the tax debts which are the object of the regularisation or, where such proceedings have not taken place, before the public prosecutor, the State counsel or the procedural representative of the regional, provincial or local administration concerned lodges a querella or a complaint directed against that person, or before the public prosecutor or the investigating judge carries out steps which permit that person to have formal knowledge of the commencement of proceedings.

Likewise, the effects of the regularisation provided for in the preceding subparagraph shall be applicable where tax debts are satisfied once the right of the administration to determine them in administrative proceedings has become time barred.

The regularisation by the taxpayer of the tax position shall prevent prosecution for the possible accounting irregularities or other instrumental falsifications which, exclusively in relation to the tax debt which is the object of the regularisation, that person may have committed prior to the regularisation of the tax position.

5. Where the tax administration finds indications that an offence against the public revenue has been committed, it may assess separately, on the one hand the concepts and amounts which are not connected with the possible offence against the public revenue, and on the other those which are connected with it.

The assessment indicated first in the preceding subparagraph shall follow the ordinary procedure and shall be subject to the regime of remedies proper to any tax assessment. And the assessment which may derive from those concepts and amounts which are connected with the possible offence against the public revenue shall follow the procedure which the tax legislation establishes for that purpose, without prejudice to its final adjustment to what is decided in the criminal proceedings.

The existence of criminal proceedings for an offence against the public revenue shall not halt the action for the recovery of the tax debt. The tax administration may commence the steps directed at recovery, unless the judge, of its own motion or at the instance of a party, has ordered the suspension of the enforcement proceedings, upon the provision of security. If security cannot be provided in whole or in part, the judge may exceptionally order the suspension with a total or partial dispensation from security if it finds that the enforcement might cause irreparable harm or harm which is very difficult to repair.

6. Judges and courts may impose upon the taxpayer or upon the perpetrator of the offence the penalty of the next lower degree or of the two next lower degrees, provided that, before two months have elapsed from the judicial summons as a person under investigation, that person satisfies the tax debt and acknowledges the facts before the court. The foregoing shall likewise be applicable in respect of other participants in the offence other than the taxpayer or the perpetrator, where they cooperate actively in obtaining evidence which is decisive for the identification or apprehension of other persons responsible, for the complete clarification of the criminal acts or for the ascertainment of the assets of the taxpayer or of other persons responsible for the offence.

7. In proceedings for the offence contemplated in this article, for the enforcement of the penalty of a fine and of the civil liability, which shall comprise the amount of the tax debt which the tax administration has not assessed by reason of limitation or another legal cause on the terms provided for in Act 58/2003, the General Taxation Act, of 17 December, including its interest for late payment, judges and courts shall seek the assistance of the services of the tax administration, which shall demand them by the administrative procedure of enforcement on the terms laid down in that Act.

Working translation prepared by Société Juridique from the consolidated Spanish text published by the Official State Gazette. It has no official status: the only authoritative version is the Spanish original, available at the Official State Gazette and reproduced verbatim in our Spanish-language entry for this provision. Source: Organic Law 10/1995 of 23 November, the Spanish Criminal Code.