Form 720 has been controversial since it was created, especially regarding its sanctioning regime, which has been considered excessive and contrary to the principle of free movement of capital in the European Union.
Now, in two sentences of July 4 and 6, the Supreme Court has annulled the fines derived from non-compliance with the obligation to present Form 720 within the deadline and has declared the retroactivity of said annulment, for which it will be allowed to claim for the sanctions already imposed previously, with the nuances that we will analyse below. In this article, we tell you what has happened to Form 720 in recent months, what changes have been made and what repercussions the declaration of nullity of sanctions has.
What happened to Form 720?
The Superior Court of Justice of the European Union ruled in January 2022 that Form 720 establishes a series of obligations that go against the principle of freedom of movement of capital in the European Union; in addition, the court considered that the sanctions for the Non-compliance with the obligation to inform about goods and rights abroad that are regulated concerning Form 720 are excessive since they can exceed 100% of the value of said goods and rights. On the other hand, these penalties are not proportionate to those imposed in the case of similar violations in other types of national taxes. As a consequence of the above, the TSJEU forced Spain and the Tax Agency to modify the regulations, especially the sanctioning regime related to Form 720.
Elimination of the sanctioning regime of Form 720
To comply with the provisions of the TSJEU ruling, the Tax Agency has eliminated the specific sanctioning regime of Form 720 so that the general sanctioning regime that regulates the General Tax Law will be applied to people who fail to comply with the obligation to present said form. In this way, the sanction may not exceed 50% of the defrauded quota, when previously the sanction could reach 150% of the undeclared quota; in addition, the fixed amount of sanctions had to be added for each omitted data or set of data, incomplete, inaccurate or false.
On the other hand, the Treasury also modified the prescription of the obligation to present Form 720 and established a term of four years. Previously, there was no specific statute of limitations.
What does the retroactivity of the annulment of fines mean?
As we said before, the two sentences issued by the Supreme Court have declared the nullity of the sanctions imposed due to non-compliance with the obligation to present Form 720 within the stipulated period and, in addition, have established the retroactivity of said annulment.
Specifically, the Supreme Court upholds the appeal of a taxpayer who was fined 5,800 euros for a severe infraction for submitting a statement of assets and rights abroad after the deadline (since she owned shares and securities in Switzerland ) corresponding to the year 2012, which was presented in the year 2014 and without prior request from the Treasury. The Tax Agency imposed a penalty for each data declared after the deadline, and the taxpayer appealed in various instances until reaching the Supreme Court.
In addition, the Supreme Court, in its ruling, recognises the retroactivity of the annulment of the sanctions since it establishes that:
“The rights that correspond to individuals do not derive from the judgment that declares the breach but from the provisions of Community Law that have direct effect in the internal legal system.”
“Therefore, the retroactive effect of the nullity of the sanctioning actions is recognised, even before the CJEU ruling of January 27, 2022”.
The declaration of the retroactivity of the nullity of the sanctions for filing Form 720 after the deadline implies the possibility of the fines imposed being annulled even before the ruling of the TSJEU of January 27, 2022, in the case in which they have been appealed before the courts.
Therefore, although each specific case must be studied, the sanctions that can be annulled are those that were appealed to the courts within the legally established period. For which there is already a final judgment, in principle, the annulment of the sanction could not be applied. Next, we analyse each specific case:
A taxpayer who has appealed the sanction or who still has the possibility of appealing
Suppose a resolution has not been issued regarding the appeal of the sanction related to Form 720. In that case, the taxpayer must wait for said resolution, which, in principle, should apply the jurisprudence of the Supreme Court and annul the sanctions imposed by the Tax Agency. for filing late or incorrectly Form 720.
Suppose the taxpayer has not yet filed the appeal but is within the deadline. In that case, they can file an appeal for reversal or an economic-administrative claim requesting the annulment of the sanction imposed based on the jurisprudence of the TSJEU and the Supreme Court.
A taxpayer who has not appealed and whose sanction is firm
In this case, the taxpayer has two options:
- Request the declaration of nullity of full right, which can be presented when a firm administrative act breaches the law of the European Union.
- Submit a claim for the patrimonial responsibility of the State due to the economic damages suffered by the taxpayer as a consequence of the sanctioning regime of Form 720, which is contrary to European Union law.
Therefore, if a penalty has been imposed on you as a result of failing to submit Form 720 on time or doing so inaccurately or incorrectly, it is essential that a tax expert analyse your case, study the alternatives and establish the possibilities of appealing the penalty. And achieve the annulment of said sanction based on the jurisprudence we have analysed.
Leave A Comment
You must be logged in to post a comment.