The Supreme Court has admitted three appeals against Form 720

Since the informative declaration of goods abroad, Form 720 Spain, was approved in 2013, questions have been raised about its legality, especially in relation to the sanctions that are imposed for non-submission or submission after the deadline. Now the Supreme Court has admitted three appeals for processing since it has observed indications of illegality.

Why are there indications of illegality?

In two of the orders of admission of the mentioned appeals, the Supreme Court questions the so-called formal sanctions or by data or data set, for breach of the obligation to file Form 720 Spain. It is considered that these sanctions may be incompatible with European Union law, in relation to the principle of proportionality and the fundamental freedoms that are regulated in the Treaty on the European Union.

In this context, the Supreme Court asks whether, in relation to the proportionality judgement on sanctions (suitability, necessity and proportionality in the strict sense), the parameter that must be taken into account should be the number of goods abroad or the value of penalties.

The third appeal that has been filed refers to an out-of-term filing of Form 720 Spain regarding prescribed assets. In this case, a taxpayer filed Form 720 Spain on time, reporting ownership of a property in Portugal in 2012. The following year, he filed the return again, reporting another property also located in Portugal. The two properties were acquired in prescribed periods but the Tax Agency considered that it was an undeclared capital gain and imposed a 150% penalty.

The TSJ of Catalonia considers whether or not Form 720 Spain complies with European Union Law

The legality of Form 720 Spain has been raised in numerous courts. In fact, the Superior Court of Justice of Catalonia has issued an order in which it refers to a preliminary question to the Superior Court of Justice of the European Union. In the order, the Court asks for clarification on whether Form 720 Spain goes against the principles of free movement, equal treatment and non-discrimination that are regulated in the Treaty on the European Union.

The question that must be settled is whether or not the principle of legal certainty is met.

The ruling of the TSJ of Catalonia has important implications since it means that the Spanish courts themselves are considering the legality of the declaration of assets abroad.

Along with all of the above, we cannot forget that judgement on the appeal that the European Commission filed against Form 720 is pending, and this could be issued at the end of this year or the beginning of next year.

In short, the penalties related to Form 720 Spain are still being imposed by the Treasury, but more and more taxpayers are appealing such penalties as they are considered abusive. For the moment, we must wait to see what the Supreme Court and the TSJ of the European Union rule.