C.111 - Tagus Excavation Case

I. In the account of proven facts, it is highlighted how, thanks to the passivity of Felipe and José Ramón, the business Excavaciones del Tajo SL failed to pay the amount due as tax debt for the financial year 1998 (35,881,529 pesetas).

II. We question the criminal liability of Felipe and José Ramón.

II.1. There is nothing in the facts to cast doubt on the existence of human conduct, so we will not dwell on this point.
II.2 . With regard to the objective nature of this conduct, it is appropriate to focus on the subject of tax fraud (art. 305), which currently requires defrauding the Public Treasury, by action or omission, of amounts owed in taxes in excess of €120,000. It is necessary to assess whether the passivity of the managers of Excavaciones del Tajo constitutes a risk typically relevant to this offence. If we take into account how the tax system works, we will come to the conclusion that such passivity constitutes a typically relevant risk. Indeed, if the Treasury has configured the system of management of taxes in such a way that the declaration of the taxpayers is followed by the settlement and payment of the debt, whoever does not go to declare will not be able to settle and pay his debt. In other words, the tax authorities expect the respective taxpayers to declare, settle and pay their tax debts. As the system of management of taxes is configured, those who do not declare and settle their debts cannot pay taxes. Therefore, we understand that such passivity constitutes, in this particular context of the relationship between individuals and the Treasury, a typically relevant risk of fraud. It is an omissive conduct, the omission of the duty to contribute, which in this case has not been satisfied in 1998. The goal aspect of the conduct is fulfilled.
As regards the subjective aspect, malice can be inferred from a series of knowledge which can undoubtedly be imputed to Felipe and José Ramón. They know that the year is passing and that they do not file the appropriate tax return. They know that business generates profits. They also know, like everyone else, that if they do not file a tax return, it is not possible to pay tax. If they are aware of these data, they cannot be unaware that, once the time for declaration and payment has passed, they will have ceased to be taxed without remedy. They are therefore aware of the risk of tax evasion inherent in subject . The conduct fulfils the requirements of the subjective subject of fraud (art. 305.1).

As it is expressed in Las Partidas (XIII c.), VII, degree scroll 34, "But the ancient sages say that it is a great fault for him to do something he does not know, or that is not convenient for him" (rule V).

II.3. Nothing is said of a status that would allow us to speak of grounds for justification, so we must therefore affirm its unlawfulness.
II.4 . The question now arises as to how both parties (Felipe and José Ramón) are liable for this fraud. From entrance it is necessary to resolve the question of whether these persons can commit the offence of fraud attributed to them. Indeed, this offence can only be committed by those who meet the specific characteristics of a tax debtor. And it turns out that neither of them is a corporate income tax debtor, but rather the legal person Excavaciones del Tajo, which, as such a legal person, is not acting in the strict sense of the word, even if they are penalised. This leads to a problem that seems insoluble: a person who is a tax debtor cannot commit a crime, and those who commit a crime are not debtors, so no one is liable. This status will be repeated in many cases of corporate tax fraud, as in this case it is legal persons who are liable. To avoid these situations of inexplicable impunity, the criminal law has provided a specific regime in subject for actions on behalf of or in the name of another (Art. 31): in special crimes - i.e. those requiring a particular condition in the agent to be the perpetrator - in which this condition falls on a legal person, it is not the qualified subject who is liable, but the person who acts as de facto or de jure administrator (we now leave aside the cases of representation and acting in the place of another). According to this provision, the aforementioned dilemma is avoided and the administrators (Felipe and José Ramón) will be liable. But are they both co-perpetrators, one of them the perpetrator and the other a participant, one of them the perpetrator and the other not liable? They could be co-perpetrators if there was a agreement with distribution of tasks between them, but this does not seem to be the case, as José Ramón lacked decision-making capacity (he was subject to Felipe's dictates, he did not have signature on the benches, he only carried out administrative tasks...). Therefore, the distribution of roles in the execution cannot be affirmed, but rather the reservation of executive acts in favour of Felipe. But this does not mean that José Ramón could not be a participant in Felipe's crime (perpetrator): he could be a co-operator (necessary or merely an accomplice), depending on the nature of the acts carried out. I am inclined to think that, given the status and José Ramón's role in the business ("he lacked any initiative ... subordinate functions"), his conduct is one of cooperation, classifiable as not necessary (complicity), due to its lesser relevance. Felipe, on the other hand, is the perpetrator of the fraud.
II.5 . As far as guilt is concerned, nothing is said about Felipe's unimputability, nor about a possible status of non-execution of other conduct. For the rest, I understand that it is not appropriate to allege ignorance of the prohibition to defraud, although it could be argued - and Felipe argued it in his appeal resource - that he was unaware of the criminal prohibition to defraud the tax authorities. As a businessman, he knows that he is obliged to keep accounts, and that the accounts make it possible to know the state of a company business, not only for those who manage it, but also to determine its tax debts. He also knows that in today's society there are a series of duties, tax duties, that no economic agent can ignore. He cannot fail to realise that any commercial agent carries out transactions that are of interest to the tax authorities. However, these data would only support the conclusion that the general unlawfulness of their conduct is known, but not their specific criminal unlawfulness. The knowledge required for guilt for a conduct is the one referring to the criminal unlawfulness, and not to the specific penalty or sanction. This error, if it occurs, is not an error on the unlawfulness, but on other elements that are not necessary. Nor is the knowledge required for guilt for a conduct a mere knowledge that the conduct is unlawful, but something more: that it is criminally unlawful, that the specific conduct infringes criminal rules, rules that carry criminal sanctions. In our case, it cannot be argued that an adult person in a Western country such as ours who is engaged in commercial traffic is unaware of the criminal unlawfulness (I repeat: not the specific criminality). Therefore, if he is aware of the criminal unlawfulness of defrauding, is imputable and is not in a situation of unenforceability status , Felipe must be found guilty of the offence of tax fraud.

Cfr. SAP Madrid, 10 November 2003, which reads: "The accused, just as he had knowledge enough to set up a commercial entity, he was also aware that he had tax obligations. The defendant Felipe himself stated at the trial that "he has been a businessman for 45 years and knows that he has to file a tax return every year". It is not conceivable, despite the simple allegation of the appellant merely stated in the resource, that the accused was unaware of these tax obligations".

II.6. The subject of fraud requires exceeding the amount of 120.000 €. This figure can be understood as an element not of the subject but of the punishability. If so, it is not necessary that the fraudulent intent covers the specific amount (although other thesis argue that it is an element of subject, so that they require intent even if it is possible in relation to the amount). The amount operates as a condition for the punishability of the conduct: below that figure, a tax offence comes into play, punishable mainly by a fine; above that figure, a crime, punishable by imprisonment, among others. In this case, if the amount is exceeded, the conduct is also punishable. The fact that he went on 26 January 2001 to file a tax return for the 1998 tax year could avoid the penalty (art. 305.4), but as the tax return was filed after the tax office had already started proceedings, it is not possible to invoke this ground for waiving the penalty. The conduct is therefore punishable.

III. Consequently, Felipe has to answer for the offence of tax fraud (art. 305.1). The penalty foreseen is both a prison sentence of one to four years and a fine of one to six times the amount defrauded, in addition to other penalties (art. 305.1, in fine). He is also obliged to pay the tax debt owed. And José Ramón will be liable, as an accomplice, with the respective penalties lower by one Degree. Moreover, since the reform of the Criminal Code (2010), which provides for the criminal liability of legal persons (arts. 31 bis and 310 bis), it would be possible under this regulation to make manager to Excavaciones del Tajo (obviously, if the facts were subsequent to that rule).

Classically, a distinction has been made between the factual error and the error iurisor error of fact and error of law. These binomials do not coincide exactly with those of "error of subject" and "error of prohibition" respectively, which are more modern. The reason why they do not coincide lies in the fact that there are elements of subject that are factual in nature, but also others that are legal or normative. Therefore, fraud - and the error of subject- can refer to both factual and legal elements (elements of a legal or normative nature). Thus, the obligation to pay tax in C.111Is it an element of subject or of the prohibition (unlawfulness)?

A somewhat different status occurs in C.112, where a subject is unaware of the content of the rule, but not of a prohibitive or prescriptive rule , but of an optional one. In effect, in subject of causes of justification, the agent can consider as lawful what in reality the legal system does not permit. In this way, someone believes he is acting under an optional rule (which would give rise to a cause of justification) which in reality does not cover him. Note how this case presents a different status - but in a way parallel to others we are already familiar with: the "gesture" case(C.72) and the "Joe & Jack" case(C.73). Why?