The Supreme Court ratifies the death of Model 720

Last January the Court of Justice of the European Union annulled Model 720, and this week the Supreme Court forced the Treasury to return a fine for assets abroad, definitively overturning its effects on personal income tax (IRPF).

 

We recall that Model 720 was introduced in 2012, just after the implementation of the tax amnesty, when the then Finance Minister of the Popular Party, Cristóbal Montoro, wanted to increase state revenue in the midst of the financial crisis, making sure that not a single euro escaped. Time has shown that it was not an effective measure by those close to his party or part of the Spanish royalty.

The regulation required citizens resident in Spain to report assets abroad in excess of 50,000 euros. It also established high fines of up to 150% of the amount to be declared if this information was submitted to the Tax Agency after the deadline.

 

A blow from the European Court of Justice

In January 2022, the Court of Justice of the European Union (CJEU) overturned the entire regulation, both the basic mechanism and the high fines, considering that the restrictions on the free movement of capital introduced by Model 720 were disproportionate.

On the other hand, the ruling annulled the practice of non-prescription, which the Treasury had been systematically imputing to all the declared assets, without assessing whether the facts prescribed by the limitation period in the tax sphere, currently set at 4 years, so that the amounts to be paid were determined.

Therefore, the ruling concludes that taxpayers who had declared assets abroad using Model 720 do not have to pay the debts for the prescribed years, and that the penalties applied are unlawful. It is precisely on this point that the Supreme Court has based its decision to stop the tax authorities from charging the assets abroad contained in the tax return as unjustified capital gains because they are not subject to the statute of limitations.

 

The Supreme Court applies the CJEU ruling

This was reflected in a ruling of 20 June in the contentious chamber, which upheld the appeal lodged by two taxpayers against a ruling of the High Court of Justice of Extremadura that condemned them for declaring, outside the time limit, real estate assets abroad. A significant fact because it cancels, for the first time, a sanction of Model 720, as disproportionate.

Therefore, the Second Section of the Contentious-Administrative Chamber agrees with the individuals, and annuls the decision of the High Court of Justice of Extremadura, ordering them to return the money, plus the corresponding interest. The court thus seeks to establish proportionality between the seriousness of the act committed and the balance of the current accounts not declared by the taxpayer.

This ruling opens the door to all those penalised taxpayers who, being unhappy with the disproportionate penalties imposed by the Tax Agency, have systematically gone against the application of these penalties and who could now see their amount significantly reduced.

 

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  1. Miquel Pérez CorralMiquel Pérez Corral says:
    Miquel

    Gràcies info!!

  2. Pere SorianoPere Soriano says:
    • Jordi CollJordi Coll says:
      Jordi

      A tu per seguir-nos i confiar en nosaltres, Pere. Moltes gràcies pel teu comentari!!!

      3 months ago
  3. alicia Coiduras Charlesalicia Coiduras Charles says:
    alicia

    Gràcies per aquesta informació

  4. Carles MarsalCarles Marsal says:
    Carles

    Tota la informació és bona.
    Gràcies

    • Mireia CanoMireia Cano says:
      Mireia

      Gràcies Carles, per a nosaltres és important poder-vos informar de tot i amb rigor. 😊

      3 months ago
  5. Josep Grifoll SauríJosep Grifoll Saurí says:
    Josep

    Els diners en el compte d’11Onze són dipositats en entitats financeres no espanyoles, què passa si un d’aquests països, on hi ha els comptes d’11Onze, surt de l’Eurozona? En quina moneda funcionarien aleshores els comptes d’11Onze en aquest país? Seguirien en Euros?

    • James SeneJames Sene says:
      James

      SÍ Seguirien en Euros. De fet podries tenir comptes a Espanya en Yens or Dollars etc…la devisa es independent del país on tens el compte. 🙏🏿

      3 months ago
  6. Manuel Bullich BuenoManuel Bullich Bueno says:

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