When is a tax crime committed?

A few days ago, a news item appeared in the press that the Navarra provincial court had confirmed the penalty of six months in prison and an €80,000 fine for two former Osasuna managers for €191,718 not paid personal income tax in 2013 for unpaid withholdings or improperly practised. This is an example of a tax offence. Today’s article will tell you what a tax crime consists of, what penalty is it punished with, who can commit it, and what types of tax crimes exist.

What is a tax offence?

The tax crime is committed when the Public Treasury is defrauded, be it state, autonomous, provincial or local, and the payment of taxes is avoided, or benefits obtained improperly are enjoyed. In any case, for there to be a tax offence, the amount defrauded must be greater than €120,000.

The tax offence is regulated in article 305.1 of the Penal Code, which establishes the following:

Anyone who, by action or omission, defrauds the state, autonomous, provincial or local Public Treasury, avoiding the payment of taxes, amounts withheld or that should have been withheld or income on account, obtaining unduly refunds or enjoying tax benefits from the same form, provided that the amount of the defrauded quota, the amount not paid from the withholdings or payments on account or the refunds or tax benefits unduly obtained or enjoyed exceeds one hundred and twenty thousand euros will be punished with a prison sentence of one to five years and a fine from both to six times the aforementioned amount unless they have regularised their tax situation in terms of section 4 of this article.

The mere presentation of statements or self-assessments does not exclude fraud when other facts prove it.

In addition to the penalties indicated, the person responsible will be imposed the loss of the possibility of obtaining subsidies or public aid and the right to enjoy the benefits, or tax incentives or Social Security during the period of three to six years.

As a consequence of the preceding, what is punishable by the tax offence are the following behaviours:

• The illusion in the payment of taxes.
• Improper returns.
• The undue tax benefits.

In addition, we must remember that for it to be considered a tax offence, the amount defrauded must exceed €120,000.

What is the penalty for tax crime?

As we have seen in the definition of the Criminal Code of the tax offence, in the case of the basic type, this offence is punished as follows:

• Prison sentence of one to five years.
• Fine of both six times the amount defrauded.
• Loss of the possibility of obtaining subsidies or public aid or the right to receive benefits or tax incentives or Social Security for a period of three to six years.

Aggravated type and attenuated type of tax offence

In some instances, the tax offence can be punished with a prison sentence of two to six years and a fine of twice six times the amount defrauded; that is, an aggravated rate is regulated. For the aggravated type to exist, the following circumstances must exist:

• That the amount defrauded exceeds €600,000.
• That the fraud was committed within a criminal organisation.
• That the use of natural or legal persons or entities without legal personality interposed, businesses or fiduciary instruments or tax havens or territories of zero taxation conceals or hinders the determination of the identity of the taxpayer, or of the person responsible for the crime, the determination of the amount defrauded or the assets of the taxpayer or the person responsible for the crime.

In these cases, the loss of subsidies or aid will also be imposed, and the right to receive tax benefits or Social Security.

The tax offence also includes an attenuated type with a penalty lower by one or two degrees in the following cases:

• When the taxpayer or the perpetrator of the crime judicially recognises the facts within two months of the court summons.
• If those who participate in the crime, other than the taxpayer or the perpetrator of the crime, collaborate to obtain evidence, to clarify the facts or to ascertain the assets of the taxpayer.

Exemption from criminal responsibility in tax crimes

There is a case regulated in article 305.4 of the Penal Code in which there is an exemption from criminal responsibility. This exemption occurs when the person who has committed the offence regularises the tax situation before:

• The Treasury notifies you of the start of the verification or investigation actions.
• The Public Prosecutor, the State lawyer or the procedural representative of the regional or local autonomous administration files a complaint or complaint.
• The Public Prosecutor’s Office or the investigating judge carry out actions to initiate proceedings.

Difference between tax crime and tax offence

Another essential aspect of tax offence is its difference from the tax offence. The first parameter to differentiate them is the limit of €120,000 established by law so that if this limit is exceeded, we would be facing a tax offence.

The tax crime and the tax offence are similar in that in both cases, there is an intention of the offending subject, although it is a milder assumption in the case of the offence. On the other hand, as we have seen, the tax offence may have an aggravated assumption when, for example, a criminal organization is used to commission the offence.

As a consequence of the preceding, it is important always to have the advice of tax experts who study your tax situation, apply the tax benefits that legally correspond and file taxes promptly to avoid inspections, sanctions or imposition of penalties.