At the beginning of July, a new legislative decree came into force in Spain to fight tax fraud even harder than before. Here are the most important changes:
New cap on cash payments
The maximum amount for cash payments in business transactions will be reduced from 2.500 to 1.000 euros. This applies to all payments involving a businessman or a freelancer. The upper limit for cash payments by foreign non-tax residents in Spain will also be reduced from the previous 15.000 to 10.000 euros. In the event of a breach, fines of 25 per cent of the amount paid will be imposed.
Inheritance and gift tax
The new legislation is of particular importance in the case of inheritance and gift contracts on the Balearic Islands, as up to now the transfer of assets through an inheritance or gift contract was not taxable for the donor in the IRPF (income tax return).
On this basis, and in order to avoid abuses, the rules have been amended so that the inherited assets are taxable within five years of the conclusion of the contract or the death of the donor, although this only applies to transfers of assets that take place after the law comes into force.
Reference value of real estate now mandatory
Under the new law, all real estate must now be valued according to its current market value. The cadastral office of the respective municipality is responsible for determining this reference value. In the case of a donation or inheritance, the real estate value may not be lower than this “cadastral reference value”.
And: From now on, the newly decreed reference value for real estate also comes into play in the property tax declaration.
Tax increases and fines
Late filing of tax returns will also be penalised more severely than before. A surcharge of 1 per cent on the total amount of tax due will be levied for each month of delay that has elapsed. If the delay lasts longer than one year, a surcharge of 15 plus interest on arrears will be due.
If the late submission of the tax return is justified and accepted by the tax office, the fine is reduced from 50 to 65 per cent of the penalty amount. If the fine levied for a tax offence is paid without objection, the fine reduction increases from 25 to 40 per cent as before.
Cryptocurrencies
The new regulation immediately imposes a reporting requirement for asset holdings and transactions involving cryptocurrencies. These transactions must be reported in the declaration of foreign assets (Form 720). In case of non-compliance with the reporting obligation for virtual currencies held abroad, the sanction is a fixed fine of 5.000 euros. False or incomplete declarations regarding cryptocurrency assets are punishable by a minimum of 10.000 euros.
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