The CJEU eliminates the controversial aspects of Form 720 or declaration of assets abroad

Today, January 27, 2022, the Judgment has finally arrived by the Court of Justice of the European Union about the controversial Form 720 of declaration of assets abroad, in which the Court declares that Spain has failed to comply with the obligations incumbent on it under the principle of free movement of capital.

Although the text of the same does not question the existence of the aforementioned form to guarantee the effectiveness of fiscal controls and fight against fraud and tax evasion, it does eliminate the most controversial aspects of it:

• The imprescriptibility. According to the ruling, the current configuration of the model achieved, in practice, imprescriptibility and, therefore, the possibility of the Administration regularizing the taxpayer’s situation sine die, breaking the rule of tax prescription configured in our legal system.
• Regularisation of up to 150%. Let us remember that the lack of presentation, or the exact completion of the model, could lead the taxpayer to pay the value of these assets as an income obtained as an unjustified capital gain and a proportional fine of 150% of said undeclared tax.
• Fixed fines for undeclared or incorrect data or data-set. Fixed-amount penalties that could reach €5,000 per data or data set were added to the 150% sanction. In the opinion of the Court, said sanctions are not in any proportion to other sanctions provided for similar infractions in our tax system.

In short, this is a severe correction by the Court to the current configuration of Form 720. However, given the valuable source of information that it represents for the Administration and the fact that the Court has not questioned its existence, it is highly likely that taxpayers will continue to be required to file such a return.

We are expectant of the adaptation and modifications that the Administration makes to this declaration.