In brief
- Not every failure to pay tax or social contributions is an offence: there must be intentional fraudulent conduct and the financial thresholds laid down by law must be exceeded.
- The tax offence requires the tax evaded to exceed €120,000 per tax or reporting period and is punishable by one to five years’ imprisonment and a fine of one to six times the amount defrauded (Art. 305 of the Criminal Code).
- The Social Security offence requires more than €50,000 to have been defrauded over four calendar years, and is punishable by one to five years’ imprisonment and a fine of one to six times the amount defrauded (Art. 307 of the Criminal Code).
- Full regularisation (acknowledgement and payment of the debt) before audit, inspection, a complaint or a querella may exclude criminal liability.
- A company may be fined one to two times or two to four times the amount defrauded, in addition to losing subsidies and tax or Social Security benefits (Art. 310 bis of the Criminal Code).
Offences against the Public Treasury —including the tax offence (delito fiscal)— and against Social Security protect the financial resources needed to fund public services and the social protection system. In a business context, they may affect both directors and de facto managers and the company itself, where the fraud is committed for its benefit or as a result of a lack of control within the organisation.
Not every failure to pay tax or social contributions is an offence. For criminal liability to arise, there must be fraudulent conduct —for example, concealing income, falsifying transactions, simulating expenses or manipulating relevant data— and the financial thresholds laid down by law must be exceeded.
These offences require intentional conduct. There is no general form of commission through mere negligence.
What is the tax offence and what is the penalty?
A tax offence is committed by anyone who defrauds the State, regional, foral or local Treasury through any of the following conduct:
Evading payment of taxes.
Failing to pay over amounts withheld or that should have been withheld, such as certain withholdings made from employees’ or professionals’ income.
Improperly obtaining tax refunds.
Enjoying tax benefits to which one is not entitled.
The tax evaded (cuota defraudada) must exceed €120,000 per tax or reporting period. The mere filing of a return or self-assessment does not exclude the offence if the fraud is proven by other facts.
The ordinary penalty is one to five years’ imprisonment and a fine of one to six times the amount defrauded. In addition, the loss of the right to obtain public subsidies or aid and to enjoy tax or Social Security benefits or incentives may be imposed for a period of three to six years. These consequences apply without prejudice to payment of the debt and the corresponding interest (Art. 305 of the Criminal Code).
Aggravated tax offence
The penalty rises to two to six years’ imprisonment and a fine of two to six times the tax evaded where any of the following circumstances is present:
The tax evaded exceeds €600,000.
The fraud is committed within a criminal organisation or group.
Front companies, fictitious persons or entities, fiduciary arrangements, tax havens or zero-tax territories are used to conceal the person responsible, hinder calculation of the debt or prevent their assets from being located.
In these cases, the prohibition on obtaining subsidies and enjoying certain tax or Social Security benefits may extend to four to eight years (Art. 305 bis of the Criminal Code).
When does tax regularisation avoid the tax offence?
Regularisation may exclude criminal liability where the taxpayer fully acknowledges the debt and pays it before being notified of the commencement of audit or investigation proceedings aimed at determining it. If no such proceedings have commenced, the taxpayer must do so before a complaint (denuncia) or criminal complaint (querella) is filed against them, or before they have formal knowledge of court proceedings concerning those facts.
Regularisation must be complete and may take effect even if payment is made after the Administration’s right to assess the debt through administrative channels has become time-barred. It also prevents prosecution of certain instrumental forgeries relating exclusively to the regularised debt.
If, after being summoned by the court, the person responsible pays the debt and admits the facts within the following two months, the judge may impose a penalty one or two degrees lower. This possibility does not amount to an automatic exemption.
When is defrauding Social Security an offence?
An offence against Social Security is committed by anyone who commits fraud by evading payment of contributions and other jointly collected items, obtains undue refunds or enjoys deductions to which they are not entitled.
The amount defrauded must exceed €50,000, calculated on the total amount defrauded over four calendar years. The ordinary penalty is one to five years’ imprisonment and a fine of one to six times the amount defrauded. The loss of the right to obtain public subsidies or aid and to enjoy tax or Social Security benefits or incentives may also be imposed for three to six years (Art. 307 of the Criminal Code).
Mere non-payment is not enough in itself. There must be fraudulent conduct, such as concealing workers, falsifying contribution bases, using front companies to prevent collection or providing inaccurate data that make it difficult to establish the real debt. Filing the contribution documents does not exclude the offence either if the fraud is proven by other facts.
Aggravated Social Security offence
The penalty increases to two to six years’ imprisonment and a fine of two to six times the amount defrauded where:
The contributions, undue refunds or deductions exceed €120,000.
The fraud is committed within a criminal organisation or group.
Interposed persons or entities, fiduciary arrangements, tax havens or zero-tax territories are used to conceal the identity of the person responsible, the amount defrauded or their assets.
The loss of subsidies and benefits may extend to four to eight years (Art. 307 bis of the Criminal Code).
Regularisation before Social Security
Regularisation before Social Security requires full acknowledgement and payment of the debt before notification of the commencement of inspection proceedings or, if there are none, before a complaint or querella is filed or before formal knowledge of criminal proceedings. If payment and acknowledgement take place within two months of being summoned by the court, the judge may reduce the penalty by one or two degrees.
Social Security benefit fraud
It is also an offence to obtain, prolong or enable another person to enjoy Social Security benefits by simulating or misrepresenting facts, or by knowingly concealing information that should have been disclosed.
The ordinary penalty is six months to three years’ imprisonment. Where the facts are not particularly serious, having regard to the amount, the means used and the personal circumstances, a fine of one to six times the amount defrauded may be imposed. In both cases, the loss of subsidies and benefits for three to six years may be ordered.
If the value of the benefits exceeds €50,000, or certain circumstances relating to a criminal organisation or the use of interposed structures are present, the penalty is two to six years’ imprisonment and a fine of one to six times the amount. The prohibition on obtaining subsidies and benefits may extend to four to eight years (Art. 307 ter of the Criminal Code).
Voluntary repayment of the benefit, increased by the statutory interest rate plus two percentage points, may exclude criminal liability if made before any inspection or check, before a complaint or querella, or before formal knowledge of court proceedings.
Subsidy and public aid fraud
An offence is committed where a public subsidy or aid, including one from the European Union, is obtained by falsifying the required conditions or concealing circumstances that would have prevented it from being granted. The same applies where the funds are used for a purpose other than the one for which they were granted.
If the amount obtained, defrauded or misapplied exceeds €100,000, the penalty is one to five years’ imprisonment and a fine of one to six times the amount. In addition, the loss of subsidies and tax or Social Security benefits for three to six years may be ordered.
Where the amount exceeds €10,000 but not €100,000, imprisonment of three months to one year or a fine of one to three times the amount may be imposed, together with the loss of those benefits for six months to two years. To calculate the amount, sums from one or more public authorities are added together where they fund the same activity.
Full repayment, with the applicable late-payment interest, before audit proceedings or a complaint may exclude criminal liability. If it takes place after being summoned by the court and within the following two months, together with an admission of the facts, the judge may reduce the penalty by one or two degrees (Art. 308 of the Criminal Code).
Can a company be criminally liable for tax or Social Security offences?
Yes. A legal person (company) may be liable where the offence is committed in its name or on its behalf and for its direct or indirect benefit by a legal representative, director or person with powers of organisation and control. It may also be liable where the offence is committed by a person subject to the authority of the company’s managers and there has been a serious failure to fulfil the duties of supervision, monitoring and control.
For these offences, the company may be sentenced to a fine calculated on the amount defrauded or improperly obtained:
Where the offence committed by the natural person carries a maximum penalty of more than two years’ imprisonment, the fine for the legal person is one to two times the amount defrauded.
If the maximum penalty exceeds five years, the fine is two to four times that amount.
In addition, the company may be subject to the loss of subsidies and tax or Social Security benefits for three to six years, a prohibition on contracting with public authorities and other penalties applicable to legal persons, including judicial administration, suspension of activities or dissolution in the cases provided by law (Art. 310 bis of the Criminal Code).
Civil liability and financial consequences
A conviction is not limited to imprisonment and a fine. Civil liability comprises reparation of the loss caused: normally, payment of the tax evaded, the unpaid Social Security contributions, the undue refunds or deductions, the benefits improperly received or the subsidies that must be repaid, together with the applicable interest.
The Administration may continue the assessment and collection through administrative channels even while criminal proceedings are pending, unless the court orders a stay under the terms provided by law. The debt may be enforced through the enforced collection procedure (apremio), and interim measures may be taken over assets to secure payment.
For example, a company that conceals part of its sales in order to reduce VAT and Corporate Income Tax may simultaneously face the criminal liability of the director who organised the concealment, the liability of the company itself, payment of the tax debt and interest, fines and the temporary loss of access to subsidies or public contracts. The specific assessment depends on the amount, the mechanism used, the involvement of each person and the point at which the situation is regularised.
Frequently asked questions
From what amount is tax evasion a criminal offence in Spain?
The tax evaded must exceed €120,000 per tax or reporting period. In addition, there must be intentional fraudulent conduct: not every failure to pay tax is an offence.
What is the penalty for the tax offence?
The ordinary penalty is one to five years’ imprisonment and a fine of one to six times the amount defrauded, together with the possible loss of the right to obtain subsidies and tax or Social Security benefits for three to six years. In the aggravated tax offence, for example where the tax evaded exceeds €600,000, the penalty is two to six years’ imprisonment and a fine of two to six times the tax evaded.
When is failing to pay Social Security an offence?
When the amount defrauded exceeds €50,000, calculated on the total amount defrauded over four calendar years, and there is fraudulent conduct, such as concealing workers or falsifying contribution bases. Mere non-payment is not enough in itself.
Can the tax offence be avoided by paying the debt?
Regularisation may exclude criminal liability where the taxpayer fully acknowledges the debt and pays it before being notified of the commencement of audit or investigation proceedings or, if none have commenced, before a complaint or querella or formal knowledge of court proceedings. If they pay and admit the facts within two months of being summoned by the court, the judge may impose a penalty one or two degrees lower.