Spanish Tax Evaders Spend, Spend, Spend!

by Ulrika Lomas, Tax-News.com, Brussels

09 October 2001

According to the Bank of Spain, the rush to spend undeclared pesetas before the introduction of the euro on the 1st January is becoming increasingly frenzied, with sales of luxury cars, property, and household goods reaching levels not seen since the 1980s.

Around 1,400 billion pesetas (£5.2 billion) have emerged from under mattresses this year, nearly four times last year's amount, and the Bank of Spain reports that the demand for new banknotes, which usually rises at this time of year, has been virtually non-existent.

According to reports, the purchasing of property is the preferred way to spend what the Spanish refer to as 'dinero B', as up to half the price of a new home can be paid in cash. House prices in desirable locations such as Madrid, the Balearics, and the Basque region have risen by over 50% in less than 2 years.

However, the automobile industry has not done badly out of the pre-euro spending frenzy either, and it was revealed thar at a time when the economies of many European countries are cooling off, sales of Mercedes in Spain have risen by around 37%, Audis by 16%, and BMWs by 13%.

The Spanish government has announced that from January 1st, Spaniards with undeclared cash up to a maximum of 2.5 million pesetas will still be able to exchange them for euros with no questions asked. The peseta will cease to be legal tender in March 2002, but will be exchangeable in banks until July.

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