The number of foreigners living in the Balearics who do not pay income tax like other residents has increased, according to the representative of the State Tax Agency in the Balearics, Ana Julia Fernández and the tax office is stepping up its efforts to crackdown on those avoiding paying up. When asked about the nationality of these offenders, she replied that she could not disclose this information for reasons of confidentiality. ‘At the Tax Agency, it is essential to respect the principle of the right to preserve the confidentiality of personal data,’ she said.
The Tax Agency’s inspection department also keeps a close watch on Spaniards who try to simulate residence in other countries with a lower tax rate, even though they actually live in Spanish territory. Fernández stressed the need for citizens to pay the Treasury what they owe, in order to maintain the welfare state: hospitals, schools, social services, etc.
Regarding the criteria for determining whether a person is resident in Spain or not, she points out that one of the most common is to have residence for more than 183 days in Spanish territory. However, she clarifies that other aspects are also taken into account. The delegate of the State Tax Agency in the islands emphasises that the inspection department is also responsible for monitoring international related-party transactions that reduce taxation in Spain by transferring profits to low-tax jurisdictions.
On this point, she explains that the actions carried out by the inspection department require a considerable amount of time, which is why they are not very numerous, but she stresses that they manage to recover significant amounts of money that benefit all residents in Spain.
The Tax Agency’s management department carries out numerous control measures, but these require less time. For example, it checks that the income tax returns filed by taxpayers who carry out economic activities are correct and that rents are declared correctly. It should be remembered that the Tax Agency has focused on tourist rentals in the Balearics and is notifying owners of the rentals they have made over the past year. This is one of the main new features of the 2024 Income and Wealth Tax Campaign, which began on 2 April and ends on 30 June.
However, Fernández clarifies that ‘the Tax Agency is not going to catch citizens out; we encourage voluntary compliance’. In relation to this issue, she stresses that it is one of her main objectives and explains that ‘to this end, we make all the information we have available to taxpayers’. In conclusion, she highlights the ‘excellent work carried out by the Tax Agency’s civil servants’.