36 percent of rental taxes go unpaid

THE owners of three out of every ten properties rented out in the Balearic Islands don't pay tax to the Inland Revenue on them, Central Government reported yesterday.

Tax administrators “Gestha” calculate that there are 17'000 properties in the Islands where owners are not declaring income. The figure is equivalent to 36.5 percent of all property in the region which is rented out.

Despite the findings, the Tax ministry has claimed that the Balearics remains one of the regions of Spain with the lowest level of fiscal fraud in terms of undeclared rentals.

But at a national level, say “Gestha” in its fourth annual report on “Black Market Rentals in Spain,” there are more than a million properties being rented out without owners making a tax declaration, 55.4 percent of the total. “Gestha” commented in its latest publication that the ministry's Fraud Prevention Plan ground to a virtual halt in 2008 without even “moderately acceptable” results. The Balearics, however, contributed bravely to the government's attempt to make everyone “pay up.” Nearly 3'500 owners registering their rentals in the Islands that year, reducing the black market business by 11'116 properties.

This means, says “Gestha” that there is 28 million euros less in “black money” being earned from rentals in the Balearics. The current figure of untaxed earnings is now more likely to be in the region of 50 million euros.

Tax ministry officials have said that it is clear that the Inland Revenue's tactics to force people to declare their income and pay taxes accordingly is just not working. Whilst the Balearics may be considered one of the regions where the degree of tax fraud in property rentals is low ministry sources remarked, owners in Catalonia, Madrid and Andalucia are “getting away with” 855, 838.4 and 449.6 million euros a year respectively.