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Spain Recovers Record Sums from Tax Fraud

Thu 20th Jan 2011

The Spanish government's attempts to clamp down on Tax Fraud, recovered a staggering €10 billion last year. The sum was 23 % higher than the previous year and equated to 1 % of the countries GDP, according to preliminary figures released earlier in January by the government in Spain. 

In response to an out of control deficit, the government  has launched several austerity measures designed to cut Spain's deficit to 6 % of G.D.P. this year, from 11.1 % in 2009. "This kind of improvement should certainly be welcomed given the kind of commitments that Spain has now made towards its European partners and financial markets," said Juan Manuel López Carbajo, head of Spain's agency for taxation.

However, this sum is just the tip of the iceberg, according to Jeffrey Owens, director of the center for tax policy and administration at the Organization for Economic Cooperation and Development , who noted that Spain is not the only country homing in on tax evasion as a step toward closing its budget deficit.

Mr Owens spoke of larger eurozone economies such as France and Germany, who's Tax Fraud investigations have recovered €1 billion and €4 billion respectively from offshore accounts alone during 2010.


Mr López Carbajo said that the yield seen last year were nothing special, but simply the results of an improvement in planning, strategies and procedures. He gave the creation of a special department to monitor whether large taxpayers, especially companies with turnovers in excess of €100 million  that operate across borders, as an example of this.

Another example was the crackdown in Tax Fraud in the real estate industry, the collapse of which has been integral to the country's economic downturn. For example, Mr López Carbajo said his agency had changed focus onto land transactions to identify the occurrences of Tax Fraud at an earlier stage in the construction process.

Spain has also benefitted from attempts from the global community as a whole to force Switzerland and other tax havens to loosen their banking secrecy laws, as well as using information provided by other means.


During 2010 Spain's Tax Fraud revenues included  €300 million which was recovered due to a list of undeclared HSBC accounts passed to the French authorities by a former employee, who then passed the information over to Spain.

Significantly for Spain, Andorra  for many years a tax haven for the Spanish, was removed  from the O.E.C.D.'s list of "uncooperative tax havens" in 2009, and has agreed to cooperate in future cross-border fraud investigations.

Mr López Carbajo welcomed such arrangements, but also cautioned against too much optimism that they would be the answer to Spain's economic woes. "These accords were signed under huge international pressure and because the countries wanted to improve their image," he said. "I have no doubt that these countries will continue to resist full cooperation as hard as possible, so we must really ensure that the end result is not that they get a better reputation without actually handing over a lot more information."

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