Gecko Towers
The 27th January 2022 will go down in Spanish Tax law history as a poor day for the Spanish legislature.
Put succinctly the Court of Justice of the European Union (CJEU) has decided – and delivered its judgment today – that the Spanish state – via its Tax Office (the Hacienda) – was wrong to require the completion of the Model 720 and to impose the fines associated with its enforcement.
What was Model 720? It is the so-called and dreaded “Declaration of Assets Held Abroad”. Its completion was required by all Spanish residents stating the precise details of all assets, cash, shares and pensions etc that they held outside Spain.
The Hacienda, having previously been given the opportunity by the European Union to change Model 720, had no taken such remedial action.
The resulting judgment decided that Model 720 imposed “disproportionate” restrictions on the free movement of capital which is against one of the fundamental tenets of the EU. As a result, Spain has effectively broken the EU law by its imposition of Model 720.
This judgment effectively pulls the rug from under the Hacienda over Model 720 in its entirety together with its associated high fines imposed for non-compliance. The fines, which were imposed on many, had the potential to exceed 100% of the value of the overseas asset. Such penalties have been flatly rejected by the CJEU
In reaching its decision that Spain had failed to comply with its obligations under the freedom of movement of capital, the CJEU has gone even further in stating: “The Spanish legislature has gone beyond what is necessary to guarantee the effectiveness of tax controls and the fight against tax fraud and evasion.”
After learning of today’s ruling from the CJEU, the Spanish Minister of Finance, announced that the government will shortly modify the Model 720, to adapt it to the ruling and recalled that it is still in force.
So what to do now? If you have been affected by any fines imposed as a result of a failure to declare or mis-declare any asset held overseas, under the rules of the now discredited Model 720, it is anticipated that you will be able to reclaim the monies paid by you directly from the Hacienda. To do this you may prefer to use the offices of a specialist Tax Accountant. Here, we may be able to be of assistance to you.
Should you be interested in discussing the legal process involved in buying a property in the Marbella region, we would be delighted to assist you. Our multi-disciplinary team of bi-lingual, highly experienced and wholly independent Abogados and Asesores Fiscales are ready to help you.
Please call me, Mark FR Wilkins, during usual business hours on +34 600 343 917 or, if you prefer, or e-mail me at mark@roslegal.es
Please note that our posts are for general interest. There is no substitute for proper legal advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal or financial advice.
© Mark FR Wilkins 2022. All rights reserved.