If you’re living or doing business in Spain, understanding the tax audit system and avoiding penalties is essential. Spanish tax authorities (Agencia Tributaria) take compliance seriously, especially for expats and foreign investors.
This article explains:
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What triggers a tax audit in Spain
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Common penalties and fines
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Deadlines, interest charges, and surcharges
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How to respond if you’re audited
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How to avoid trouble in the first place
🔍 What Triggers a Tax Audit in Spain?
The Agencia Tributaria uses algorithms, data matching, and random selection to open investigations. Red flags include:
| ⚠️ Red Flag | 🚫 Risk |
|---|---|
| Unreported foreign income | Tax evasion suspicion |
| Frequent VAT refunds | Possible overclaim |
| Large foreign bank transfers | Undeclared capital |
| Real estate purchases with low declared income | Money laundering suspicion |
| Failing to file Modelo 720 (foreign assets) | Severe penalties |
| Using high IRPF deductions | Abuse of tax allowances |
🧠Spain also receives info from over 100 countries via CRS (Common Reporting Standard).
đź’¸ Common Tax Penalties in Spain
Tax penalties depend on the offense:
| Offense | Penalty |
|---|---|
| Late tax filing | 1%–20% + interest |
| Late payment | 5%–20% surcharge |
| Underreporting income | 50%–150% of unpaid tax |
| Fraud or concealment | Up to 150% + criminal charges |
| Failing to file Modelo 720 | €5,000 per undeclared asset (capped but still severe) |
⏰ Interest also accrues on late payments, usually at around 4% annually.
🧾 How Tax Audits Work
If selected for audit, you’ll typically receive:
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A notification by certified letter or digital mailbox (DEHĂş)
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A request for specific documents (bank statements, invoices, proof of residency, etc.)
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A formal meeting or remote review
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A resolution notice with possible fines or amendments
🗂️ You must respond within deadlines—usually 10 to 15 working days.
đź“… Key Deadlines and Surcharges
| Delay | Surcharge |
|---|---|
| Within 3 months | 5% (no interest) |
| 3–6 months | 10% |
| 6–12 months | 15% |
| Over 12 months | 20% + interest |
đź’ˇ Filing Modelo 100 (income tax) or Modelo 210 (non-resident) late can result in escalating fines.
🧮 Examples of Real-Life Penalties
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A non-resident who didn’t declare rental income from a Spanish property for 2 years was fined €3,200.
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A freelancer who underreported income by €10,000 received a €4,000 penalty (40%) plus interest.
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A retiree who didn’t file Modelo 720 on time faced €1,500 in fixed fines—later reduced on appeal.
🛡️ How to Respond to a Tax Audit
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Don’t ignore it — deadlines are strict
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Hire a tax lawyer to manage communication
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Submit complete documentation with clear explanations
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Negotiate penalties where possible
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Appeal unfair resolutions via TEAC (Tribunal EconĂłmico-Administrativo Central)
đźš« Never attempt to delete records or provide false documents.
🧯 How to Avoid Spanish Tax Penalties
âś… Best practices include:
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Keep digital and paper records for 5 years
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File on time (even if income is zero)
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Use professional software or a gestor
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Avoid overly aggressive deductions
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Declare all foreign assets via Modelo 720 (when applicable)
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Maintain clarity between residency status and where income is sourced
🇪🇸 Borderless Lawyers: Audit Defense & Tax Compliance for Expats
We help:
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Prevent tax penalties through proactive planning
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Represent clients during tax audits or appeals
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Advise on Modelo 720 and foreign asset declarations
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Rectify noncompliance with minimal fines
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Maintain proper documentation and timelines