The Spanish Tax Administration and the Impact of Covid on Its Functioning

01.2021

During the month of June, at the height of the transition towards the so-called “new normal”, Spanish media outlets were engaged in a recurring debate: how the country should position itself in the post-Covid world. There was a general sense of relief and cautious optimism. After months of uncertainty and restrictions, many believed that the worst was over and that it was time to regain economic and social stability. Nevertheless, it was also widely recognised that the pandemic had exposed deep structural weaknesses in both public and private management, and that certain changes would be unavoidable if Spain was to move towards a more efficient and transparent model of governance.

Among the numerous discussions concerning healthcare, education, and the economy, it was striking that hardly anyone mentioned the need for reforms within the tax administration, despite its essential role in financing the State and maintaining a direct relationship with citizens and businesses. Experience from recent years has demonstrated that the health crisis has not only affected tax collection and compliance, but also — and quite significantly — the internal functioning of the various Spanish tax administrations. Problems that had existed long before Covid have worsened under new organisational dynamics, remote working arrangements, and restrictions on face-to-face services.

The following observations address how Covid has influenced the operation of the Spanish tax administration and outline potential improvements that could enhance its performance in the present context.

Access by compulsory appointment:

For several years now, it has no longer been possible to attend tax offices without a prior appointment — a system applied not only by the central administration (AEAT) but also by regional and municipal authorities. Although prior appointments were introduced to prevent queues and improve efficiency, the rigid implementation of this system has had the opposite effect: it has created a barrier to access. In many cases, appointments are granted with delays of one or two weeks, preventing taxpayers from carrying out urgent or simple formalities promptly. The queues have not disappeared; they have merely moved outside the buildings and become invisible. This approach has erected a wall between the taxpayer and the administration. The appointment system should be optional and, if required, appointments should be available on the same day or the following day at the latest.

General delays exacerbated by Covid:

The pandemic has made access even more difficult. Today, visiting an AEAT office or managing an in-person procedure has become almost impossible:
a) Appointments are granted between two and six weeks in advance, even for simple tasks such as submitting documents at the registry — something that previously required no appointment at all.
b) Contacting the official responsible for a file is practically impossible. The individuals who draft or notify administrative acts are now completely out of reach for the taxpayer.
c) Offices now operate only as general service counters or “hotlines”. The floors where technical specialists used to work remain closed to the public. As a result, it is no longer possible to raise specific queries directly with area experts.

Decline in operational quality:

Efficiency in the processing of appeals and cases has clearly deteriorated. Processing times have lengthened, and in some cases files are left unresolved until the taxpayer formally requests that the administration issue a decision. Postal notifications are also significantly delayed, sometimes taking nearly a month to arrive from the date of issue. According to informal comments from staff, these delays are partly due to the fact that the AEAT pays lower fees for postal services than private companies such as Amazon, meaning that administrative correspondence receives lower priority.

Reluctance to handle physical documentation:

In some departments, there is a noticeable reluctance to handle physical documentation, particularly when it originates from abroad, due to fears of contagion. While understandable during the initial stages of the pandemic, this practice is now illogical and obstructs the normal functioning of the administration, which by its nature depends on document management.

Electronic administration and the absence of personal contact:

Digitalisation has been presented as a strategic success and widely praised. However, the near-total replacement of face-to-face interaction with electronic procedures has created serious difficulties. Many taxpayers experience poor communication with the administration, consisting mainly of automatic emails or standard notifications that fail to address their concerns. This lack of personal interaction often results in misunderstandings, errors, and delays. For electronic administration to be truly effective, it must be complemented by a personal contact channel — such as telephone support — that ensures real, case-specific assistance.

Mismatch with international realities:

The current online system is designed for a standardised, purely domestic reality. Forms and electronic procedures do not accommodate the complexities faced by taxpayers with cross-border elements — multiple tax residencies, foreign income, or permanent establishments abroad. Consequently, individuals and companies with international profiles operate within a framework that does not reflect their situation, leading to legal uncertainty and unequal treatment.

Deterioration of the tax information hotline:

The AEAT’s basic tax information service, which once functioned efficiently and served as a valuable tool for taxpayers and advisers, has lost much of its effectiveness. Phone lines are often overloaded, and it is increasingly difficult to obtain accurate or complete information.

Internal lack of coordination and uneven technical quality.
Despite the AEAT’s growing efforts to train staff in international tax matters, a clear imbalance persists between the different departments — management, inspection, and appeals — as well as between those responsible for different taxes. As a result, similar procedures often receive responses of highly variable quality depending on the department that handles them.

Deficient reasoning in administrative acts:

The reasoning provided in assessments and decisions has deteriorated noticeably. In many cases, the explanations given are insufficient or incomprehensible. Since it is no longer possible to contact the official who dealt with the case, taxpayers are often forced to lodge administrative appeals — most frequently economic-administrative claims — simply to understand the logic behind a decision. In cities such as Barcelona, these claims can take around four years to be resolved, even though the law requires a decision within one year. This chronic delay increases levels of dispute, which were already high before the pandemic.

Spanish tax administrations appear to have withdrawn into a defensive structure against Covid, isolating their staff from external contact. While conceived as a protective measure, this isolation has ultimately distorted the administration’s essential public service function. Paradoxically, there is no evidence that this model has significantly reduced health risks compared with private-sector employees performing similar tasks.

Moreover, no transparent information has been provided regarding the effectiveness of the remote working system that was rapidly introduced. It is common to hear responses such as “the person in charge is working from home and only comes to the office one day a week”. This situation effectively paralyses proceedings while statutory deadlines continue to run.

Conclusion:

The current situation of the Spanish tax administration is far from satisfactory and urgently requires reform. The mechanisms introduced during the pandemic have produced a slower, less accessible, and less transparent system. Excessive procedural rigidity, the loss of personal contact, and a lack of internal coordination seriously undermine the ability of tax advisers (Steuerberater) to defend their clients’ interests — a task that depends heavily on the proper functioning of the administration.

Immediate measures are required to restore agility, coherence, and proportionality to the system. Digital modernisation must be accompanied by an organisational culture oriented towards public service, with flexible structures and technically competent personnel. Only by combining efficiency with transparency and legal certainty can the tax administration fulfil its essential mission: ensuring the correct application of the tax system while safeguarding the rights of taxpayers in a modern State.

++ Article originally published in German in the magazine “Economía” in October 2020, issued by the German Chamber of Commerce in Spain ++