Hacienda's Stern Warning to Many Spaniards: If You Get Too Clever, You'll Pay Dearly

The Tax Agency has issued a clear warning to freelancers who receive payments under the table: if they continue with this illegal practice, there will be no escape. The tax authorities have implemented new methods to detect undeclared income and are determined to act harshly against tax fraud.

The tax authorities warn that payments under the table, that is, income not declared to the tax authorities, are illegal and carry severe penalties. This practice, common in some sectors, harms the economy and creates unfair competition.

Tax Authorities No Longer Warn Freelancers Who Receive Payments Under the Table

The Tax Agency is intensifying its efforts to identify and sanction those who engage in these fraudulent activities. To combat tax fraud, the tax authorities have implemented several innovative strategies.

Banks are required to provide detailed information about their clients' transactions on a monthly basis, rather than annually. This includes account movements, card payments, and transactions through applications like Bizum.

New Detection Methods by the Tax Authorities

This change allows the tax authorities to detect discrepancies between declared and actual income more efficiently. Additionally, the tax authorities have established greater control over transactions made with prepaid and virtual cards, especially those of high amounts.

These cards, often used to preserve anonymity in transactions, present a challenge for tax authorities. The goal is to prevent them from being used as a tool to hide undeclared income.

With the implementation of electronic invoicing for SMEs and freelancers, the tax authorities aim to reduce late payments and limit payments under the table. This measure facilitates the control of economic operations and ensures greater fiscal transparency.

Don't Do This Anymore for Your Own Good: Severe Fines

Continuing the practice of receiving payments under the table can result in fines, which can range from 50% to 100% of the undeclared amount. In extreme cases, the penalty can reach 150% if considered a very serious offense.

In addition to the fine, the tax authorities will demand the payment of taxes owed with late payment interest. To avoid problems with the tax authorities, it is advised to:

• Declare All Income: It is essential to reflect all income obtained in tax returns, without omitting any source of income.
• Maintain Orderly Accounting: Keeping updated records of economic operations facilitates the submission of correct returns and reduces the risk of errors.
• Seek Professional Advice: Having the support of tax advisors can help comply with tax obligations and stay informed about legislative changes that may affect economic activity.
• Adopt Electronic Invoicing: Implementing electronic invoicing systems not only complies with new regulations but also facilitates the control and recording of economic operations.