Between a rock and a hard place for business tax payers in Catalonia

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La Moncloa flickr
An uncomfortable appearance for Carles Puigdemont and Mariano Rajoy

AS the split between the Catalan and National governments gets wider, the latest salvo concerns the payment of income tax and IVA (VAT).

The Spanish Finance Ministry has issued a blunt statement ‘reminding’ tax payers in Catalonia that any payment should be made to the correct authority which is the national government.

Any company or self-employed person which pays money due for VAT, income tax or corporation tax to the Catalan authority will be considered as having not paid the tax and may be open to criminal charges.

This statement was made in advance of the threatened Independence Referendum which will possibly be held on Sunday October 1 as the Catalan government has created an enlarged Catalan Tax Authority which is ready to divert the collection of national taxes to the ‘New Catalan State’.

According to Catalan Deputy First Minister Oriol Junqueras, systems are in place to allow for the collection of some €42 billion of tax as soon as the decision to create an independent state is taken.

In Spanish law, if VAT is collected and then not paid to the correct authority it will leave the collector open to a charge of theft and if a company, all of the directors could face charges.

The Spanish government appears powerless to stop the proposed referendum although it has been declared illegal for the Catalan Parliament to even buy ballot boxes using Community funds although it is suspected that the ballot boxes and voting papers are currently being held in a secret location.

As the referendum date approaches, both Spanish Prime Minister Mariano Rajoy and Catalan leader Carles Puigdemont regularly indulgence in a war of words with each other.

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