Spain’s tax agency is increasingly relying on public tip-offs to investigate suspected fraud, it has emerged.

According to the Agencia Tributaria’s latest annual report for 2025, officials opened 20,958 investigations after receiving information from members of the public – a 1.3% increase on the previous year.

Those investigations resulted in 3,791 tax assessments involving 1,484 taxpayers, leading to more than €100million in additional tax bills and penalties.

While not every report results in an inspection, the figures show that public complaints have become one of the Hacienda’s key sources of intelligence when selecting taxpayers for further scrutiny.

Who reports businesses to Hacienda?

According to officials, the majority of reports concern small businesses and self-employed workers (autonomos).

The most common allegations include hiding income or cash sales, false or irregular invoices, undeclared rental income and tax fraud linked to business accounts.

Tax advisers say the people most likely to report businesses include current and former employees, customers and rival companies.

Former staff are often able to provide internal documents, emails, screenshots or photographs showing undeclared cash payments, off-the-books wages or sales being deliberately hidden.

Customers may report businesses that refuse to issue invoices or offer lower prices for cash payments.

Competitors also frequently alert the tax authorities if they believe a rival is gaining an unfair advantage by operating in the black economy.

What happens after someone reports you?

Submitting a report does not automatically trigger a tax inspection, reports business publication Diario A y E.

Instead, the Hacienda first reviews the information alongside the taxpayer’s existing records, including VAT returns, income tax declarations, third-party reporting and any previous investigations.

Only if officials believe there is sufficient evidence will they launch a formal inspection.

Reports that are considered unfounded or irrelevant are simply archived.

Under Spain’s General Tax Law, anyone can report suspected tax irregularities to Hacienda, although the person making the complaint is not entitled to know the outcome of the investigation.

What does Hacienda investigate most?

According to the Tax Agency and tax experts cited by Diario A y E, the most common issues flagged in public reports include:

Undeclared income: By far the most frequent allegation involves businesses hiding cash sales or declaring significantly less revenue than they actually generate.

False invoices: Inspectors regularly receive reports alleging fake invoices, inflated expenses or companies being used to divert income and reduce tax bills.

‘Dual-use’ software: Although less common than in previous years, Hacienda still receives complaints about software designed to delete sales or hide transactions from tax authorities.

Lifestyle that doesn’t match declared income: Reports sometimes focus on business owners whose luxury homes, expensive cars or lavish spending appear inconsistent with the income they declare to the tax authorities.

Undeclared property income: Complaints also frequently concern rental properties that have not been declared or property sales where the true sale price is alleged to have been hidden.

Businesses operating without declaring activity: Hacienda also investigates reports of businesses continuing to trade after officially deregistering, people working without registering as self-employed, or income being earned outside their declared business activity.

These cases are particularly common in sectors such as hospitality, construction, home renovations, transport, beauty services and private tuition.