Spain’s 720 Asset Declaration Law Ruled Illegal By EU Court Of Justice
Spain News
Published: 27 January 2022 13:52 CET
Spain’s controversial asset declaration legislation commonly referred to as the ‘Model 720’, has been declared illegal under EU law.
The fines which are often imposed under the legislation, which forces residents to declare assets that are owned overseas, were also deemed to be excessive with the court saying that it undermines the free movement of capital within the European Union.
The official press release from the Court of Justice of the European Union stated, “The restrictions on the free movement of capital imposed by that legislation are disproportionate”.
“On the 15 February 2017, the Commission issued a reasoned opinion in which it found that certain aspects of the requirement for Spanish tax residents to declare overseas assets or rights 1 by means of a form entitled ‘Form 720’ were incompatible with EU law. According to the Commission, the consequences of failure to comply with that obligation are disproportionate in the light of the objectives pursued by the Spanish legislation, namely to guarantee the effectiveness of fiscal supervision and to prevent tax evasion and avoidance,” it continued.
The courts also pointed out that the fines imposed for late filing or non-declaration of assets were often excessive and in some cases amounted to more than 100% of the original assets value.
The case dates back to 2015 when the European Commission decided to sanction Spain for requiring resident taxpayers to declare the properties, bank accounts or financial assets they held abroad. The lack of compromise and a solution led Brussels to bring the case before the European courts in June 2019.
In their ruling, the courts said that the Spanish legislation failed to fulfil its obligations under the free movement of capital, subjecting the failure to comply with or the partial or late compliance with the obligation to provide information on those assets located abroad.
The courts said that the fines levied on those with foreign assets and who failed to comply with the Model 720 legislation, often far exceeded those which were imposed at a national level with fixed fines of a minimum of 1,500 EUR or 10,000 EUR.
They said that Spain’s legislators had gone beyond what is necessary to guarantee the effectiveness of fiscal control and the fight against tax fraud and evasion.
Source
https://curia.europa.eu/jcms/upload/docs/application/pdf/2022-01/cp220018en.pdf
https://www.20minutos.es/noticia/4947409/0/el-tribunal-de-justicia-de-la-ue-dice-que-es-ilegal-el-modelo-espanol-para-declarar-bienes-en-el-extranjero/
Image Credit: FLICKR/Cédric Puisney
