Tax and other measures to reduce the public deficit, Spain


Target Groups: 


On 30 March 2012, Royal Decree Law 12/2012 introduced various tax and administrative measures aimed at reducing the public deficit. The new law establishes highly relevant modifications in taxation. Of the new tax measures introduced, the most noteworthy are those made in the Corporate Income Tax Law, particularly in relation to the deductibility of financial expenses. There is also a very relevant measure allowing taxpayers, both individuals and entities, to regularise past defaults. The group of measures approved includes many significant initiatives.



Due to of the difficulties the Spanish economy is going through, several measures have been taken recently in order to rectify the main imbalances that have occurred as a result of this situation as quickly as possible. Among them, the most important is to reduce the public deficit, which has become the main focus of several measures included in Royal Decree Law 20/2011 of 30 December on urgent budgetary, fiscal and financial measures to correct the public deficit. It must be pointed out that together with these measures, the Decree Law has taken up a number of proposals that were ruled out during the previous term of office as a result of the rejection expressed by the opposition, as in the case of tax amnesty.

All these measures seek to reduce the public deficit. As such, a special tax declaration procedure has been elaborated for certain incomes, while administrative measures have been taken in order to help generate savings in the management of public sector real estate.

In order to achieve these undoubtedly challenging aims, the legislation will have to incorporate these measures without further delay, hence combining the requirements of extraordinary and urgent need as specified in article 86 of the Spanish Constitution in order to implement the regulatory figure of the Royal Decree Law.


  • To reduce the underground economy.
  • To increase the number of taxpayers who fulfil their tax obligations.
  • To reduce the public deficit.

Specific measures

On 30 March 2012, the Spanish Parliament enacted a Royal Decree (12/2012) introducing various tax and administrative measures aimed at reducing the public deficit.

Restricting the use of cash payments in business/professional transactions:

  • Cash payments are restricted to amounts below €2,500.
  • Any offence is attributable to both the payer and the payee.
  • Sanctions will be revoked provided that the Inland Revenue is voluntarily informed of the cash payment within three months after the payment is made.
  • Failure to comply will result in a sanction imposed on both the payer and payee of 25% of the cash payment made.

Measures associated with the extraordinary regularisation programme:

  • Payers of personal income tax, of corporation tax or non-resident income tax will be able to submit a tax return in order to regularise their tax situation.
  • With this tax return, the required payment is the amount resulting from charging a percentage of 10% to the value of the assets or rights acquired.
  • Taxpayers who bring their tax liabilities up to date will be exempt from criminal responsibility.
  • The deadline for submitting tax returns and making payments was 30 November 2012.

Exemption from the modular system:

  • Exemption from the system of objective estimation is established for business owners who invoice less than 50% of their transactions to individuals.
  • This exemption is only applicable to business owners whose volume of overall profits corresponding to the previous year exceeds €50,000.
  • Occupations that may apply for exemption are those affected by a 1% deduction: carpentry, the manufacture of hardware or carpentry goods, the clothing industry, the wooden furniture industry, text and image printing, brickwork, installation and assemblage, covering and surfacing, locksmiths, plumbing, painting, plastering, road transport and removals companies.

Measures to strengthen the tax collection capacity:

  • In tax procedures:
    • The point at which preventive measures can be taken has been brought forward.
    • Until now, measures could only be taken once the estimated settlement was submitted.
    • Henceforth, measures may be applied as soon as any risk of non-payment is detected.
  • In legal proceedings against tax offences:
    • Previously, the administration was paralysed once the proceedings were sent to the tax offence department, and thus no preventive measures could be taken.
    • The Inland Revenue will now be able to take preventive measures. The Attorney General’s Office and the appropriate judicial organ will be notified and informed until the latter reaches a pertinent decision.

Increase in the liability of company successors:

  • To avoid the hereditary asset stripping of companies that will go into liquidation, the liability of successors has increased as regards the hereditary acquisitions received before formal liquidation.
  • Until now, liability was limited to the liquidation share received by the partner once the company was dissolved.

New assumption of subsidiary responsibility for deductions or repercussions:

  • Managers of companies that repeatedly submit tax returns for deductions or tax repercussions without paying the tax debts will have the subsidiary responsibility to make this payment once it is proven that there is no intention of doing so.
  • Repetition will be considered regardless of whether such conduct is consecutive or discontinuous.
  • Lack of income is considered to occur when despite the existence of partial income, the total sum is not significant in relation to the declared debt.

Toughening of sanctions as a result of opposition to inspection:

  • Tougher sanctions will be imposed in the case of opposition, obstruction, excuses or refusal of tax inspections.
  • The sanction imposed on the compulsory taxpayer under inspection who is unwilling to cooperate, when not engaged in business-related activities, will be a minimum of €1,000 and a maximum of €100,000.
  • The sanction imposed on the compulsory taxpayer under inspection who is unwilling to cooperate, when engaged in business-related activities, will be a minimum of €3,000 and a maximum of €600,000.
  • The sanction will be reduced by 50% if a change in conduct occurs.

Actors involved

Government, general administration and agent supervisors.

Outcome of evaluations; lessons and conclusions

No evaluation has yet been made due to the short time elapsed since the measure was introduced.


Domestic service, agriculture, the hospitality industry and personal services.


The measures included in the Extraordinary Regularisation Programme excuse companies and individuals who have evaded their taxes, allowing them to launder their money by paying less (10%) at a time in which measures of adjustment affecting workers are extremely tough. Furthermore, a clear lack of political coherence is observed in the fact that the governing party (Popular Party) has decided to apply the same measure it rejected when it was in opposition.


Schneider, Friedrich G., Buehn, Andreas and Montenegro, Claudio E. (2010), ‘Shadow Economies All Over the World: New Estimates for 162 Countries from 1999 to 2007’, World Bank Policy Research Working Paper Series. Available at SSRN:

Pere Fabrés, CIREM, Praxis Centre for Policy Studies


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