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Spain's Tax Amnesty Flops

by Ulrika Lomas,, Brussels

10 December 2012

Spain’s controversial tax amnesty scheme has raised less than half the amount targeted by the government at the launch of the program earlier this year.

Finance Minister Cristobal Montoro recently announced that the now closed Special Tax Declaration (DTE) scheme collected EUR1.19bn (USD1.54bn) in tax, compared with a target of EUR2.5bn.

Provided for within the framework of the Royal Decree of March 30, the DTE allowed taxpayers with untaxed assets and income held prior to December 31, 2010, to declare their situation to the tax authorities. By filing under the DTE scheme, taxpayers were then able to regularize their affairs by paying a 10% tax on the newly-declared income. The tax authorities agreed to waive penalties, surcharges and interest on these back taxes.

According to government figures, the bulk of the declarations was concentrated at the end of the reporting period. Indeed, on November 29,242 declarations were submitted, representing almost 93% of the total.

The scheme was, however, controversial from the start. Back in April, the opposition Socialist Party attempted to block the scheme by challenging the amnesty law's constitutionality.

Denouncing the “immorality” of the amnesty, Socialist leader Alfredo Pérez Rubalcaba insisted that it is simply not fair to treat citizens worse when they pay their taxes than when they do not.

However, secretary general of the ruling People’s Party Maria Dolores de Cospedal rejected these claims, insisting at the time that the initiative was not an "amnesty" and was merely aimed at regularizing a taxpayer’s situation.

TAGS: compliance | tax | tax compliance | tax avoidance | interest | law | enforcement | Spain | penalties

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