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Spiders from Madrid

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Often called Web Spiders or Web Crawlers, such terms can cause a shiver down the spines of arachnophobes until they realise that no creepy-crawlies will emerge from their computer screens.

The Spanish tax office, centred in Madrid, is a very advanced user of computer technology, which it employs extensively to cross check data, which it has available from the many different kinds of tax filings, to track down tax offenders in the still very large grey economy of Spain.

The tax office first announced in 2015 that it would be using advanced technologies, including web crawlers and spiders to crack down on the grey economy of Spain and there is little doubt that the they have had some success, as shown by the following graph published in 2021 that shows a significant reduction in the black economy in the latest two reported years of 2016 and 2017. Sadly these kind of statistics take years to compile so we have to understand what is going on as best we can with statistics that are already some four years old.

To put this into context, we need to understand that the reduction of the grey economy of Spain between 2014 and 2017, measured at 7% of its GDP, is worth an awful lot of tax revenue to the country.

During 2019-2021 Spain has averaged a Gross Domestic Product of around 1,100 to 1,200 billion Euros. The amount that the State (including the Autonomous Communities and Municipalities) take from its citizens in taxes and various contributions each year is running at 35%-40% of total GDP.

So for every Euro that becomes part of the official economy, the state will extract at least one-third in taxes.

So, cracking down on the black economy by 7% has been worth 25-35 billion Euros in new annual tax revenues for the country. Now that buys a lot of software engineers’ time!!

Spain still has a way to go with the ‘unofficial’ economies of neighbouring countries running at around 10% of GDP, leaving scope for a further 7% reduction in Spain’s grey economy to meet the levels of its neighbours. It is very clear that the tax office is not holding back in using computer technologies to increase its tax collections.

One thing is for sure, Big Data is not just good for Google, Facebook et al., the tax office of Spain is doing very well out of it too and small businesses that use websites, Facebook and other social media services to sell their goods and services should take note. In fact the tax office recently announced that it expects to be investigating 6.600 ghost companies this year. The less ethical businesses that refuse to contribute to the tax system should definitely beware of spiders and crawlers!.

Spence Clarke & Co specialises in the provision of Spanish tax, legal, audit and accountancy services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.