European funds and public aid

Improper Obtaining of Subsidies in Marbella

Text

Improper obtaining of subsidies, public aid or tax relief

The rise of European recovery funds and public aid lines for digitalization, ecological transition, and employment has multiplied proceedings for subsidy fraud in recent years — a figure of Economic Criminal Law that shares its structure with tax offenses and offenses against Social Security, but with its own thresholds and requirements that call for specialized handling. At RAKH ABOGADOS we take on this defense — and, where the client's position requires it, private prosecution on behalf of the aggrieved public administration — from the administrative verification stage onward, backed by economic experts who analyze, from the very first moment, the technical and accounting justification of the aid in question.

Two typical types of conduct: fraudulent obtaining and diversion of funds

Article 308 of the Criminal Code punishes two distinct types of conduct. The first paragraph penalizes anyone who obtains subsidies or aid from Public Administrations — including the European Union — by falsifying the conditions required for their award or concealing those that would have prevented it: this is fraud prior to the receipt of the aid, in which the deception is aimed at obtaining a benefit that would not have been granted had the true facts been known. The second paragraph, by contrast, punishes anyone who, having legitimately obtained the subsidy, applies it to purposes other than those for which it was granted: here the fraud occurs after receipt and consists of a breach of the purpose for which the subsidy was intended. Correctly identifying which of the two forms of conduct applies is essential, since the evidence and the defense strategy differ substantially between one and the other.

The quantitative threshold: 100,000 euros following the 2019 reform

Organic Law 1/2019, of 20 February, lowered the punishability threshold for this offense, which until then had been set at 120,000 euros, to the current figure of 100,000 euros. Below this amount but above 10,000 euros, Article 308.4 of the Criminal Code sets out a mitigated offense, with a prison sentence of three months to one year or a fine of between one and three times the amount involved, together with loss of the possibility of obtaining subsidies or tax benefits for a period of six months to two years. Below 10,000 euros, the conduct falls outside the scope of Criminal Law and is governed exclusively by the penalty regime of Law 38/2003, General Law on Subsidies, with the corresponding obligation of reimbursement and, where applicable, an administrative penalty. Correctly quantifying the amount actually defrauded or diverted — deducting, where appropriate, the portion of the aid genuinely justified — is frequently the first and most effective line of technical defense.

Reimbursement as an absolutory excuse and the privileged mitigating circumstance

Article 308.6 of the Criminal Code sets out a full absolutory excuse for anyone who reimburses subsidies or aid improperly received or applied — increased by the late-payment interest applicable to subsidy matters — before being notified of the start of verification or control proceedings, or before the Public Prosecutor's Office, the State Attorney, or the representative of the regional or local administration files a criminal complaint. Once this window has already closed, Article 308.8 of the Criminal Code still provides a privileged mitigating route: if the person under investigation reimburses the amount and judicially acknowledges the facts within the two months following their judicial summons, the judge may impose the sentence one or two degrees lower — a mitigating circumstance that also extends to other participants in the offense who actively cooperate in clarifying the facts. Precisely assessing what procedural stage the case is at — and, consequently, which of these two routes is still available — is one of the first strategic decisions in our defense.

Calculator: privileged mitigating circumstance under Article 308.8 CP

Based on the time limit cited above: two months from the judicial summons to reimburse and acknowledge the facts.

Date of the judicial summons

European funds: the European Public Prosecutor's Office and concurrence with Article 306 CP

When the defrauded subsidy or aid comes from European Union funds, the investigation may involve the European Public Prosecutor's Office, operational since 2021 and competent to investigate offenses that harm the Union's financial interests, in coordination with the European Anti-Fraud Office. The recent conviction handed down by the Audiencia Nacional following an investigation by the European Public Prosecutor's Office into fraud involving agricultural subsidies from the Spanish Agricultural Guarantee Fund — with those responsible and the company itself convicted, and an obligation to reimburse over two million euros — illustrates the level of rigor and international coordination that characterizes these proceedings when Community funds are at stake. Alongside Article 308 CP, Article 306 CP still sets out a specific offense for fraud against the European Union's General Budget, whose potential concurrence with the former requires a careful analysis of concurrence of offenses, which we address in every case of this nature.

Our defense strategy

Technical quantification of the fraud: we commission an independent economic expert report to precisely determine the amount actually defrauded or diverted, verifying whether it genuinely exceeds the 100,000-euro threshold.
Strategic reimbursement: we assess the time-based viability of the absolutory excuse under Article 308.6 CP or, failing that, of the privileged mitigating circumstance under Article 308.8 CP.
Proof of compliance with the subsidized purpose: in cases of fund diversion, we reconstruct the actual use of the aid through documentary evidence in order to establish that it was applied, in whole or in part, to the purpose for which it was granted.
Coordination in matters involving European funds: where the European Public Prosecutor's Office or the European Anti-Fraud Office is involved, we build the defense with full knowledge of their specific investigative procedures.

Are you facing an administrative verification concerning a subsidy or public aid, or have you already been summoned as a person under investigation for subsidy fraud? Timely reimbursement can be decisive in avoiding or mitigating criminal liability. At RAKH ABOGADOS we combine legal rigor with economic expertise to defend your assets throughout Spain.

Frequently asked questions

Above what amount is subsidy fraud considered a criminal offense?

See answer in Frequently Asked Questions →