The European Commission has warned the Government of Spain that the sanctions established for non-compliance of presentation in The model 720 They are discriminatory and in conflict with the fundamental freedoms of the European Union. Therefore, if you have not received a satisfactory response from Spain within two months, move this issue to the Court of Justice of the European Union.

What is the 720 model?

El model 720 is the form to the Declaration on assets and rights located abroad. It goods being owned by individuals resident in Spain are located abroad are declared.

Who has to submit?

Resident in Spain and owners of property located abroad individuals, if any of the following circumstances exist:

  • Presentation for the first time, when the total value of any of the groups of goods (*) to December 31 50.000 exceed euros.
  • Subsequent presentations, only in the years when any of the groups of goods (*) increases its value by more than 20.000 euros compared to the previous statement, or when the ownership of any property is extinguished.

(*) Groups of goods:

  1. bank accounts and deposits. Also those for which authorization or firm possesses, whether or not owned by the individual.
  2. Stocks, shares, investment fund shares, life insurance or disability and temporary or annuities.
  3. Estate.

What are the penalties for non-compliance?

A) When not declared, the penalty shall be 5.000 euros for each item or set of missing data, with a minimum of 10.000 euros for each "group of goods" that some information is omitted.

B) If you file late, the penalty shall be 100 euros for each data or data set, with a minimum of 1.500 euros for each "group of goods".

C) In addition to these own sanctions in The model 720, Concealment of assets abroad will encourage the allocation of income and property in the corresponding taxes (income tax, wealth tax, etc.) as well as the possible sanctions it also may arise.

What is the conflict with the European Union?

The European Commission, the government institution exercising the Union on several occasions has expressed its disagreement with two specific aspects of this legislation.

The first is the character of applicability of the tax violation. That is, under Spanish law violations regarding The model 720 they will be punishable "in aeternum", without the application of the general limitation period of 4 years.

The second aspect that the European Commission takes issue is the disproportion of sanctions on this obligation - filing The model 720 - in relation to other sanctions for obligations of national character.

Thus the failure to file the Declaration on assets and rights located abroad is punished with much higher amounts than in the case of other obligations relating to assets located in Spain.

According to the European Commission, this may discourage investment in other countries and is therefore discriminatory and contrary to the fundamental freedoms of the European Union.

Regarding this second aspect, that of disproportionate sanctions, February 15 2017 the European Commission issued a reasoned opinion directed to the Government of Spain to correct this situation. In case of not obtaining a satisfactory answer within two months, it will transfer its claim against the Spanish authorities to the Court of Justice of the European Union.

For those taxpayers who have received these sanctions, we should assess the appropriateness of filing a claim, pending possible improvements in the regulations. But do not forget that the non-conformity prevents the reduction of sanctions.

(The information contained in this text is only the summary of a much more extensive and detailed regulation, consult your particular case with an advisor.)

About the Author:

Inés Gros

DiG Lawyers