SPAIN: AEAT storms multiple sites to prevent organised tax evasion
20 March 2015
SPANISH Tax Agency (AEAT) has launched a crusade against zappers, which allow taxpayers to easily hide accounting records.
In December 2014, a special task force with AEAT technicians uncovered the complex fraudulent practices in a chain of Italian restaurants. 70 officials from 8 regional offices, along with police officers simultaneously stormed 15 sites where chain operated throughout Spain. Such organised action was necessary to prevent POS software operators to erase tax records and thus destroy tax evasion evidence.
The action uncovered a sophisticated system designed to fictitiously reduce revenue from restaurants through a software application that produces double set of books. The operation “Pasta Fresca” (Fresh Pasta) allowed AEAT to break into system matrix installed by the order of Italian franchise owned corporation. The name of the restaurants is not disclosed due to ongoing investigation. Operation Pasta Fresca is part of a plan of the Agency against the growing practice of malicious software, which is installed in cash registers or POS where accounting records are kept.
Treasury officials have discovered hidden computers in the back rooms or hidden behind secret cabinets. In this operation the officers realized that the top floor of the warehouse, under investigation, had less height than the ground floor. After searching the premises for five hours they found a room with a running server. The entrance to this room was hidden behind a wardrobe.
In July last year, similar investigation uncovered a system used by a chain of shoe stores, which diverted up to 30% of its real revenue through a double billing computer system.
In the case of Italian franchise, the system was essentially a regular management software for restaurants, but it included an option to apply fake discounts to customer bills, mostly for revenues collected in cash. The franchise also required their subsidiaries to install additional software that allowed management a access remotely (SSaaS); thus, management could decide on the amount of cash moved out from the accounting records. Franchisees restaurants had agreements to pay a royalty-commission for the use of the zapper, of around 5% of its turnover.
Agency officials made backups of all computers found in the 15 restaurants and HQ. After a first analysis, treasury sources estimated that unreported sales by these restaurants is totalling over four million euros.