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The penalties of the 720 model of The Spanish Tax Administration Agency are illegal.

Model 720

The Court of Justice of the European Union at the end of January 2022, has declared that all the sanctions proposed by the AEAT are illegal.
All the penalties proposed by the Spanish Tax Agency since 2014 for infringements linked to the ‘model 720’ (informative declaration of assets and rights located abroad) involve an “impairment” to the free movement of capital and totaling 69 million euros, of which a part will have to be returned under the judicial pronouncement.
The Tax Agency has processed 6,021 files between 2014 and 2021 (both inclusive). The total amount proposed amounts to 69,058,525 euros, this does not mean that all the money will end up being agreed.
The infractions linked to the ‘model 720’, include a diverse casuistry, not providing the declaration on time or submitting it incompletely, inaccurately or with false data, or registering it by means other than electronic, computer and telematic in those cases in which there was an obligation to do so in that way.
What does it mean that the “Form 720” is annulled by the CJEU?
The CJEU declared illegal the penalty regime associated with the ‘model 720’ as it undermines the free movement of capital within the Union.
The Law amending the tax and budgetary regulations and adapting the financial regulations for the intensification of actions in the prevention and fight against fraud – in force since October 31, 2012 – introduced the specific obligation of information regarding assets and rights located abroad through a new additional provision (specifically the eighteenth) of the General Tax Law.

The so-called ‘model 720’ was approved by virtue of an order issued on January 30, 2013 by Cristóbal Montoro, then Minister of Finance and Public Administrations. It was the year after the tax amnesty, the procedure enabled by the Government of Mariano Rajoy during the economic crisis so that fraudsters could regularize the assets for which they had not paid taxes. This allowed the Treasury to receive 1,191 million Euros, much lower than the amount they had estimated (2,500 million Euros).At the same time, on March 9, the Government modified the legal regime associated with the obligation to declare assets and rights abroad in order to bring it into line with European law, eliminating the wording of the precepts that the CJEU considered incompatible with the free movement of capital, and softening the amounts. The changes have been introduced in the General Tax Law, the Personal Income Tax Law (IRPF) and the Law for the modification of the tax and budgetary regulations and for the adaptation of the financial regulations for the intensification of the actions in the prevention and fight against fraud.

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