Spaniards will have to declare all overseas bank accounts

Finance Minister Cristóbal Montoro on Thursday announced that individuals and companies will be required to inform the tax authorities of all the bank accounts they have opened abroad.

The measure is part of a campaign the administration of Prime Minister Mariano Rajoy is preparing against tax evasion. The drive against tax fraud is expected to be approved by the Cabinet on Friday.

Montoro made the announcement in Congress during a debate on a decree that that includes a controversial amnesty for tax dodgers who declare previously hidden income, paying a charge of 10 percent. The measure was included in the draft 2012 state budget, and the government is hoping to bring in some 2.5 billion euros from its application.

The government expects its campaign against tax fraud to bring in more than 8 billion euros this year, which will help reduce the shortfall in its finances.

Spain is aiming to cut its budget deficit from 8.5 percent of GDP last year to 5.8 percent this year by means of a drastic austerity drive that calls for savings of 27 billion euros in this year’s state budget. The government also wants to shave 10 billion euros off the budget for health and education, which are the responsibility of the country’s regions.

The administration is committed to reducing the deficit further next year to bring it back within the European Union ceiling of 3 percent of GDP.

The minister described the amnesty measure as a “tax on hidden assets that once brought to light would be a positive factor in normalizing economic activity in Spain.”

According to Montoro, “the choice must be made between the options for collection in an exceptional situation.” He went on to say that the instruments chosen by the government were those that were less harmful for economic growth, avoiding the use of others that would damage consumption, such as a hike in value-added tax.

A subsequent statement issued by the Finance Ministry said the obligation to inform the tax agency of the possession of foreign bank accounts will also apply to other financial products such as shares, insurance policies and real estate held overseas.

Rajoy on Wednesday announced a ban on commercial transactions in cash of more than 2,500 euros. Infractions will carry a fine of 25 percent of the value of the transaction. Payments over that limit must now be made by bank card or transfers.

Italy and France have adopted similar measures. In the case of Italy the limit is 1,000 euros and in France 3,000 euros. Paris has also barred the payment of wages in cash of amounts more than 1,500 euros.

Cash payments in cases of tax evasion and fraud often involve the use of 500-euro notes. Over a quarter of the total number of 500-euro notes issued by the European Central Bank are in Spain and account for 70 percent of the value of notes in circulation.