The tax authorities have intensified their surveillance through inspections of companies. According to the data for 2022 that have just been made public, almost 1.9 million extensive tax checks were carried out in that year. This is 5.2% more than in the previous year and 16.1% more than in 2020. Advances in technology to detect unreported income or misapplied expenses by businesses have greatly facilitated this growth.
At Confianz, we consider it vital that companies are prepared and well advised in this type of situation. Knowledge of the areas on which the tax authorities focus their attention can make all the difference.
Among the most frequent reasons investigated were improperly applied VAT or personal income tax deductions, or income that has not been declared but appears in the Tax Agency’s databases.
Inquiries and on-site visits to the company
When there are discrepancies between the data in the Inland Revenue’s databases and those declared by the company, the Tax Agency usually verifies whether the company complies with its tax obligations. To do so, it uses two methods:
- The requirement, which consists of a registered letter requesting documentation justifying part or all of the income and taxes declared. It also includes a form of representation to send the required information to the Tax Agency.
- The on-site visit to the company, sometimes by surprise, is an option reserved for the most flagrant cases, the aim of which is to gather first-hand the evidence necessary to prove the alleged tax fraud. In 2022, 29,086 inspections of this type were carried out, most of them corresponding to files belonging to the so-called VAT Visits Plan 2022, where all possible frauds related to this tax are checked.
The eight points on which the Tax Agency is focusing its attention
The 1.9 million inspections carried out by the tax authorities on companies in 2022 are spread across these eight main areas:
1. Enforcement
It includes almost all of the management area’s checks on personal income tax, control of withholdings and other taxes, taxes declared after the deadline, etc.
2. Control of economic activities
It encompasses almost all the checks, requirements and visits to monitor the underground economy, undeclared income or even VAT or personal income tax deductions misapplied by the self-employed and small businesses.
3. Formal checks
They deal with all issues of formal defects in tax compliance and payment, as well as formal errors in invoices and accounting books.
4. Equity and corporate analysis
It encompasses all actions to monitor the assets of entrepreneurs operating through legal entities, in order to prevent them from linking their personal assets to those of their companies in order to evade taxes.
5. Concealment of activity and abuse of corporate forms
Along the same lines as the previous section, it investigates the misuse of legal entities to hide income obtained by individuals in order to obtain more tax advantages.
6. Information analysis actions
These are the checks that are carried out thanks to the detection of any tax irregularity through the Tax Agency’s computer systems. By cross-checking data, the tax authorities can check for misapplied deductions, undeclared income or any other infringement.
7. Large companies, multinationals and tax groups
This group includes all actions against companies with a turnover of more than six million euros to uncover any concealment of income, VAT infringements and other irregularities.
8. Other verification actions
They include all other actions, such as summonses, reports, analysis of complaints and actions to analyse taxpayers with the aim of ensuring tax compliance.
At Confianz, we specialise in guiding companies and freelancers through each of these areas, ensuring compliance and minimising risks.