Social Security and Subsidy Fraud: Articles 307 ter and 308 CP

Fraud in the field of social protection and public funding has two criminal faces: defrauding in order to collect benefits one is not entitled to, and obtaining or diverting public subsidies and grants by falsifying the conditions. These are Articles 307 ter and 308 of the Spanish Criminal Code (CP), two economic offences that share a decisive feature: timely repayment extinguishes the penalty. As criminal lawyers specialising in economic offences, we explain what each provision punishes, its thresholds and penalties, and how the defence is built.

Benefit Fraud (Art. 307 ter CP)

Art. 307 ter CP punishes anyone who obtains, for themselves or for another, the enjoyment of benefits of the Social Security System, unduly prolongs them, or facilitates their obtaining by others, by inducing an error through the simulation or misrepresentation of facts, or the knowing concealment of facts that they had a duty to disclose, thereby causing a loss to the public authorities.

The conduct covers both action (simulating a situation that gives rise to entitlement) and omission (failing to disclose a fact —a job, income, cohabitation, a recovery— that one has a duty to report and that would extinguish or reduce the benefit). The core element is intentional deceit: being overpaid is not enough; a deliberate manoeuvre of simulation, misrepresentation or concealment must be proven.

Penalties under Art. 307 ter

The provision grades the criminal response according to the seriousness of the conduct:

• Basic offence: imprisonment of six months to three years.
• Less serious conduct: where, in view of the amount defrauded, the means employed and the offender's personal circumstances, the facts are not especially serious, the penalty is a fine of one to six times the amount defrauded.
• Aggravated offence: if the value of the benefits exceeds EUR 50,000, or the offence is committed within a criminal organisation or group, or interposed persons or instruments are used to conceal the identity or the amount (letters b or c of art. 307 bis.1), the penalty is imprisonment of two to six years and a fine of one to six times the amount.

In every case a specific additional penalty applies: loss of the possibility of obtaining subsidies and of the right to enjoy tax or Social Security benefits or incentives for three to six years (four to eight years in the aggravated offence).

Subsidy Fraud (Art. 308 CP)

Art. 308 CP protects public funds earmarked for subsidies and grants, including those of the European Union. It punishes two forms of conduct:

• Fraud in the obtaining: obtaining subsidies or grants worth more than EUR 100,000 by falsifying the conditions required for their award or concealing those that would have prevented it.
• Diversion of purpose: in carrying out an activity funded with public money, applying more than EUR 100,000 to purposes other than those for which the grant was awarded.

The penalty is imprisonment of one to five years and a fine of one to six times the amount. To determine the sum, the total obtained, defrauded or wrongly applied is taken into account, regardless of whether it comes from one or several authorities.

Regularisation and Repayment: the Absolutory Excuse

The most significant feature of these offences —and the centrepiece of many defences— is that the legislator rewards the return of what was wrongly received. Both art. 307 ter and art. 308 CP provide for an absolutory excuse: a person who repays ceases to be criminally liable.

• What must be repaid: the value of the benefit or grant plus interest (under art. 307 ter, the statutory interest rate increased by two points; under art. 308, the default interest applicable to subsidies).
• When: before notification of the start of inspection or control actions and, if none have taken place, before the Public Prosecutor, the State Attorney, the Social Security Counsel or the authority's representative files a complaint, or before any action is taken that gives the person formal knowledge that proceedings have begun.
• Scope: the exemption also covers any instrumental forgeries committed, solely in relation to the benefit or grant being repaid, prior to regularisation.

Timely repayment is therefore a complete way of closing off the criminal risk. The decision to regularise, its precise timing and the calculation of what must be returned call for careful analysis, because acting late or incompletely may fail to produce the exempting effect.

Criminal Proceedings and the Administrative Route in Parallel

These offences have a procedural peculiarity: the existence of criminal proceedings does not halt the action of the authorities. They may claim repayment through the administrative route and continue to recover the benefits or grants wrongly obtained, unless the judge orders a stay of enforcement subject to the provision of security (or with a waiver of security where enforcement could cause irreparable harm). The amount to be repaid is provisionally fixed by the authority and later adjusted to whatever the criminal proceedings decide.

For the person under investigation, this means facing two simultaneous fronts —the criminal one and the administrative repayment one— which should be coordinated: what is decided or paid in one affects the other.

Distinction from Other Offences against the Public Finances

These figures must be distinguished from other offences in the same title:

• Offence against Social Security (art. 307 CP): punishes the evasion of contribution payments (the perspective of the contributor who fails to pay), from EUR 50,000, as opposed to art. 307 ter, which punishes the wrongful collection of benefits (the perspective of the beneficiary).
• Tax offence (art. 305 CP): defrauding the public treasury by evading taxes, with its own threshold of EUR 120,000.
• Document forgery: forgeries used as a tool to obtain the benefit or grant may be absorbed by these offences where regularisation applies, as noted above.

Lines of Defence

1. Amount: disputing the sum attributed is often decisive, because it marks the boundary between a fine and prison, between a crime and a mere administrative infringement (thresholds of EUR 50,000, 100,000 and 10,000), and between the basic and the aggravated offence.
2. Absence of intent: these are intentional offences. Showing that the wrongful collection resulted from a mistake, from a reasonable interpretation of the requirements or from a lack of information, rather than from conscious concealment or simulation, may rule out the offence.
3. Duty to disclose: in the omission form, verifying that there really was a specific duty to report the concealed fact and that the beneficiary was aware of it.
4. Regularisation and repayment: assessing repayment and its timing, both to trigger the absolutory excuse and, where it is already late, to obtain the reduction under art. 308.8 CP and enable the suspension under art. 308 bis.
5. Actual use of the funds: in the diversion of subsidies, demonstrating that the funds were applied to the purpose granted, or that the diversion did not exceed the criminal threshold.
6. Coordination with the administrative route: aligning the criminal strategy with the administrative assessment and repayment, whose processing runs in parallel.

In this area, the settled case law of the Supreme Court requires proof of intentional deceit and draws a rigorous line between the criminal offence and a mere administrative irregularity, which leaves a technical margin for defence that should be worked on from the first notification.