Spain's Tax Authorities Abolish Fines For Form 720 Foreign Asset Declaration
Spain News
Published: 13 July 2023 13:59 CET
Spain's tax agency, the Hacienda, has made a significant decision to cancel all fines related to the Form 720 declaration of assets held abroad. This action comes over a year after the Court of Justice of the European Union (CJEU) ruled against these penalties in January 2022, deeming them disproportionate.
The CJEU's judgment compelled Spain’s Hacienda to rectify certain aspects of the declaration form for taxpayers with over €50,000 in assets abroad. These individuals were required to disclose their overseas holdings to the tax authorities, facing fixed fines that could surpass the undeclared amount. These penalties were applicable for cases involving omitted or inaccurate information, as well as for late submissions.
The CJEU's ruling emphasised the excessively punitive nature of the high fines and highlighted that their combination with additional fixed fines could often lead to the total amount owed by the taxpayer exceeding 100% of the value of their foreign assets or rights.
A source within the Ministry of Finance stated, "The penalties are declared null and void and will have to be refunded." This means that all fines, whether appealed or not, will be reimbursed to the affected individuals.
When the process of adjusting the Form 720 began in January 2022, Finance Minister María Jesús Montero expressed the need to review each appeal on a case-by-case basis. The ministry estimated that the refunds would cost the Hacienda around €230 million.
According to data from the tax agency at the time, approximately 60,000 taxpayers had filed the Form 720. Since its introduction in 2012, this declaration form had reportedly enabled the recovery of over €223 billion in assets.
This development brings relief to taxpayers who were subjected to the now-annulled fines, ensuring fairness and compliance with the CJEU's ruling. It also serves as a reminder of the evolving landscape surrounding tax regulations and the ongoing efforts to strike a balance between effective oversight and proportionate penalties.
Source - Sur In English
