Last year a team of German fraud squad investigators were dispatched to the Balearics and mainland Spain in a bid to track down home buyers who had not been declaring the true value of their properties which were being purchased through Luxembourg banks. Local and Spanish authorities agreed to assist German investigators and now the local authorities are carrying out their own inspections into the foreign property market. In the Balearics the tax office and the government has put the spotlight on foreign residents who own a property in the region but spend less than six months of the year here, most of whom are non-residents. A team of tax inspectors is now investigating the situation in a bid to firstly establish how many foreign home owners have failed to either pay the relevant taxes or rates. Sources say that over 3'000 properties are under investigation and the wave or properties to be targeted are those with a value over the 50 million peseta mark. Owners of properties worth less than 50 million will not be subject to an investigation, but will instead receive a letter alerting them to the situation and asking them, where necessary, to resolve the situation and make the relevant tax or rate payments on their property. The reason for the two different approaches, is that the authorities in the Balearics do not have sufficient manpower to investigate each case.

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