Tax fraud

Time to get working! 

  1. Jone and Unai are in the process of buying a house and the seller asked them to pay part of the price in cash. In this way, he said, when they get the title deeds, the house will be valued at below the real price.

    This means that Jone and Unai have to pay less VAT than they would if it was charged on the full amount. The seller will also declare less income than he actually received.

    • Do you think they are committing tax fraud? Why? If so, who would be committing the fraud? Why? What the consequences do such actions have for society?
    • Do you know of any similar cases? Could you explain?
    • Is it necessary to pay VAT on all purchases? Give reasons for your answer.
  2. Leire's parents have decided to get alterations done to their house. The plumber has given them an estimate of €1,830.00 (including VAT) for the work. Leire's parents did not think it would be so expensive and told the plumber so. To reduce the price, the plumber has told them he can do the work without VAT (21% for this type of work). Answer the following questions:
    • How much does the VAT for this work come to?
    • What does not paying VAT imply?
    • What would be your advice to Leire's parents?
    • What would be your advice to the plumber?
    • What would happen in our society if nobody paid their taxes?
  3. Read the following news item published in EITB:

What happens in the rest of the world?

Over the last few years, there has been a considerable increase in the problem of tax fraud and evasion. The globalization of the economy and technological advances have given tax fraud acquire an international dimension. In the following activities, you can see what happens in this area around the world and closer to home.

  1. The problem of fraud and tax evasion has increased considerably in recent years; this is largely due to the fact that both the economy and fraud have taken on a global dimension.

    On the Tax Justice Network website you will find a report with information on the shadow economy in over 145 countries:

    In the table on page 4 of the report, you can see the following figures for the 10 countries with the highest rate of underground economy and tax evasion:

    • GDP (Gross Domestic Product)
    • GDP per head of population
    • Size of shadow economy: Value and percentage of the underground economy in comparison to GDP.
    • Tax lost as a result of Shadow Economy: Value of unpaid taxes as a result of the shadow economy.

    With the figures shown in this report, answer the following questions:

    • Which country has the highest percentage of GDP in the shadow economy?
    • Which country comes second?
    • What percentage of shadow economy does Spain have?
    • How much does that mean for each inhabitant?
    • How much money is Spain estimated to lose in unpaid taxes altogether?
    • You can analyse other aspects of the report that you find interesting.
  2. Analysing Tax Havens: Some of the wealthiest individuals and companies sometimes hide their money somewhere where they are not charged high taxes..

    Read the article Tax havens and answer the following questions

    • What is the purpose of tax havens?
    • What resources are used to achieve this end?
    • What criteria did the OECD (Organization for Economic Cooperation and Development) establish in 1998 to identify tax havens?
  3. Read the EITB new item on tax havens, Tax Havens EITB, and answer the following questions: 


    • What are the main features of a tax haven?
    • Who uses tax havens?
  4. In the following link, El 09/19/2013, you can find some interesting facts about what is happening in relation to tax fraud elsewhere in Europe. 


    • Within Europe, which is the country with the largest tax fraud?
    • EHow much is estimated to be lost in Spain per year in unpaid VAT?
  5. Have you ever heard the word "Offshore"? Do you know what it means? These websites will help you understand the meaning of the term:
  6. See the following video: The European Union Against Tax Fraud. In all cases a piece is missing Why? What is the missing piece? What consequences could this have?
  7. Look in newspapers, magazines, on the Internet, etc. and find cases that have become famous because of actual or alleged tax fraud. Draw up a list with as many details as possible (who, where, how, how much, etc.).

Does tax fraud exist in our context?

  1. Watch the following video on tax evasion in Gipuzkoa:

    How is the Gipuzkoa provincial revenue office working to reduce tax evasion? What does it do?

  2. The Provincial Council has begun to forge an alliance against tax fraud with stakeholders from organised society. Read the article here.

    • In what areas is the Provincial Tax Office working?
  3. Argia astekaria: Tax Fraud
    • How much does tax fraud amount to in the southern Basque Country?