Reducing penalties in acts signed in accordance

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Under Article 188 of Spain’s General Tax Law (LGT), monetary penalties imposed under Articles 191 to 197 are reduced by 65% in the case of settlement agreements (actas con acuerdo) governed by Article 155, and by 30% in cases of conformity. These are separate statutory reductions; the 65% reduction for an acta con acuerdo is not the same as the 30% conformity reduction.

The 30% conformity reduction may be recovered if the taxpayer appeals or files a claim against the tax adjustment (Article 188(2)(b) LGT). Conformity with the adjustment does not, by itself, make an otherwise unlawful penalty valid.

A further 40% reduction may apply to the amount of the penalty still payable after any applicable conformity reduction. To qualify, the remaining amount must be paid in full within the voluntary payment period, or under a deferral or instalment arrangement granted with a bank guarantee or surety insurance certificate, requested before that period ends. The taxpayer must not appeal either the tax assessment or the penalty. If an appeal or claim is filed against either, the 40% reduction is recovered. This additional reduction does not apply to penalties arising from actas con acuerdo (Article 188(3) LGT).

Accordingly, the reductions depend on the type of agreement, payment and any challenge brought. Conformity should not be described as an automatic reduction of every penalty or as a blanket waiver of all defences. The applicable sanction, its reasoning, deadlines and consequences of each appeal must be assessed in the particular case.

Official source: Spanish General Tax Law (Law 58/2003), Articles 155 and 188, consolidated text: https://www.boe.es/buscar/act.php?id=BOE-A-2003-23186