Each year, the number of inspections conducted by the Spanish tax agency (Agencia Tributaria, or AEAT) rises. For instance, in 2022, the AEAT’s enforcement actions increased by 7.6%. Although most of these inspections focused on the underground economy and the tax data of large estates or companies, this increase reflects the AEAT’s measures to combat fraud.
Spain has a long tradition of using cash. According to Funcas, the analysis centre of the Spanish Confederation of Savings Banks, 61% of payments in Spain are still made in cash as of November 2023. To regulate fraudulent practices – including “off-the-books” accounting often linked to cash payments – Law 11/2021, known as the “anti-fraud law,” was enacted on 9 July 2021. We discuss the new provisions this law introduced and how they might affect your business.
What’s in this article?
- What is the anti-fraud law?
- What are the objectives of the anti-fraud law?
- What measures are included in the anti-fraud law?
- When does the anti-fraud law take effect?
- How does the anti-fraud law affect electronic invoicing?
- How does the anti-fraud law affect cash payments?
What is the anti-fraud law?
Law 11/2021, commonly known as the “anti-fraud law”, is a regulation that introduced several changes to Spain’s General Tax Law. Although most of the changes were tax-related, the law also introduced other measures and is centered around three key pillars:
- Aligning Spanish legislation with European tax avoidance rules
- Adjusting regulations to create a fairer tax system
- Implementing more active and effective fraud control measures
Additionally, this law aims to equip three key institutions with the necessary resources: the Economic-Administrative Courts, the General Directorate of Taxes, and the AEAT. Since the approval of the anti-fraud law, these entities within the Spanish Tax Administration have seen significant operational and organisational improvements, making the goals of Law 11/2021 more achievable.
What are the objectives of the anti-fraud law?
The three main pillars of the anti-fraud law are further divided into a series of specific objectives:
- Reduce the percentage of tax fraud, which – according to Ministry of Finance technicians – accounts for 25% of Spain’s gross domestic product (GDP)
- Enhance the transparency of commercial operations
- Combat tax havens
- Improve fairness in the application of taxes to ensure that the tax burden is not perceived as punitive
- Implement stricter controls on cryptocurrencies and large estates, including oversight of both the individuals managing these estates and their families and social circles
What measures are included in the anti-fraud law?
The anti-fraud law’s list of objectives is both extensive and ambitious. Here are the measures the law introduces to achieve its goals:
- Limiting the use of cash: The AEAT aims to significantly reduce the use of cash in Spain to decrease fraud associated with cash payments. In the final section of this article, you’ll find all the changes introduced by the anti-fraud law concerning cash payments.
- Applying more dissuasive penalties: The Spanish Tax Administration recognises that some penalties imposed before the anti-fraud law lacked the expected deterrent effect. For this reason, one of the measures in Law 11/2021 increases the amounts of certain fines.
- Broadening the definition of “tax haven”: Before the anti-fraud law, some countries – although not officially considered tax havens – lacked fiscal transparency and fairness. The anti-fraud law broadens the definition of tax havens, now referring to them as “non-cooperative jurisdictions”. For instance, it now includes locations worldwide where companies that generate significant profits despite having no real economic activity can be established, as well as countries with non-existent or extremely low taxes.
- Implementing changes to personal income tax (IRPF): The anti-fraud law enforces international tax transparency to prevent companies from avoiding taxes in Spain by conducting operations in other countries. In this regard, it’s a smart choice to consolidate all your income through a single payment platform such as Stripe. With Stripe, you can accept payments using your customers’ preferred methods, across 195 countries, and in over 135 different currencies. Additionally, automated reporting simplifies the process of closing accounts and reduces the likelihood of manual errors.
- Defining what is considered “legal” for electronic invoicing software: Prior to the approval of Law 11/2021, some companies used accounting software that enabled them to maintain double accounts, which significantly compromised the transparency of their finances. However, the anti-fraud law seeks to eliminate this type of software by deeming it illegal. As a result, those who use programs that do not comply with the legal requirements will face strict penalties.
When does the anti-fraud law take effect?
The anti-fraud law took effect in July 2021, although certain sections and additional provisions did not take effect until January 2022 (e.g. the valuation of property based on the land registry). Similarly, the tax measures began to apply for tax periods starting on or after 1 January 2022.
The deadline to implement electronic invoicing software that complies with the anti-fraud law’s requirements is 1 July 2025.
How does the anti-fraud law impact electronic invoicing?
Below are the requirements set by the anti-fraud law to classify invoicing software as legal, along with the new measures it introduces regarding electronic invoicing.
Requirements for legal electronic invoicing software
The Create and Grow Law requires companies and self-employed workers registered in Spain to issue electronic invoices. However, before selecting their invoicing software, they must ensure it complies with the requirements set by the anti-fraud law to be considered legal:
- The software must have the capability to continuously forward tax information, specifically invoice records, through the VERI*FACTU system. The transmission of these documents must be secure and automated, with no manual intervention required.
- Each time a customer purchases a product or contracts a service, the software must generate an invoice registration record. This record must never be created after the transaction; it must be generated either simultaneously or just before the transaction occurs.
- Confidential data unrelated to financial matters must be kept separate from tax-relevant information. This ensures that the AEAT can directly, quickly, and easily review tax-relevant data.
- All billing records must be linked in a sequence that clearly shows when the first record was created and the date the last one was generated.
- An automatic log should record every action that occurs in the system, including logins and software updates.
- The software must guarantee the integrity of billing records, ensuring that data already recorded cannot be altered or manipulated. Once data is entered into the software, it must be protected.
What does the anti-fraud law prohibit regarding electronic invoicing?
Under the anti-fraud law, companies and self-employed individuals in Spain are prohibited from the following actions:
- Using software that enables the maintenance of off-the-books accounting. Double accounting programs are specifically targeted under Law 11/2021.
- Modifying information on the invoices.
- Including any transaction in the invoicing register that has not actually occurred.
- Failing to include invoices in the register, whether partially or completely omitted.
- Using electronic invoicing solutions that are not properly certified. Simply possessing such solutions, even if they are not actively used, could be considered a punishable offense.
The anti-fraud law prohibits companies that market these types of software solutions from:
- Selling uncertified software
- Exceeding the July 2025 deadline to adapt their software to the requirements of Law 11/2021
What are the penalties for illegal actions?
To ensure penalties serve as an effective deterrent, the AEAT will apply them rigorously. The most severe infringements can be classified as serious offences. In most cases, violations will result in fines that multiply the determined amount (ranging from €50,000–€150,000) for each fiscal year the infringements occurred.
For software marketing companies, the penalty for selling a product that has not received the necessary certification will be €1,000 for each licence sold.
How does the anti-fraud law affect cash payments?
To promote electronic invoicing and ensure companies comply with EU requirements, the anti-fraud law introduces a measure that directly affects cash payments.
The anti-fraud law’s predecessor, Law 7/2012, set a maximum limit of €2,500 for cash payments, which already yielded positive results in the fight against fraud. The anti-fraud law takes this measure a step further by lowering the cash payment limit to €1,000 (or its equivalent in other currencies). It’s important to note that this limit applies only if one of the parties involved is a professional or a company.
The changes concerning electronic invoicing and accounting software, along with those related to cash transactions, mark a significant turning point in the battle against fraud. Although the anti-fraud law is not as intricate as many other tax regulations, it introduces new requirements that will affect the digitalisation process for many businesses.
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.