{"id":34610,"date":"2022-07-09T21:00:00","date_gmt":"2022-07-09T19:00:00","guid":{"rendered":"https:\/\/www.11onze.cat\/?p=34610"},"modified":"2023-01-12T11:53:59","modified_gmt":"2023-01-12T10:53:59","slug":"supreme-court-ratifies-death-model-720","status":"publish","type":"post","link":"https:\/\/www.11onze.cat\/en\/magazine\/supreme-court-ratifies-death-model-720\/","title":{"rendered":"The Supreme Court ratifies the death of Model 720"},"content":{"rendered":"
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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).<\/b><\/h3>\n

 <\/p>\n

We recall that <\/span>Model 720<\/span><\/a> was introduced in 2012, just after the implementation of the tax amnesty, when the then Finance Minister of the Popular Party, Crist\u00f3bal Montoro, wanted to <\/span>increase state revenue in the midst of the financial crisis<\/b>, 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.<\/span><\/p>\n

The regulation required citizens resident in Spain to <\/span>report assets abroad in excess of 50,000 euros<\/b>. 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.<\/span><\/p>\n

 <\/p>\n

A blow from the European Court of Justice<\/b><\/h3>\n

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

On the other hand, <\/span>the ruling annulled the practice of non-prescription<\/b>, 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.<\/span><\/p>\n

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 <\/span>the penalties applied are unlawful.<\/b> 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.<\/span><\/p>\n

 <\/p>\n

The Supreme Court applies the CJEU ruling<\/b><\/h3>\n

This was reflected in a <\/span>ruling<\/span><\/a> 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<\/span> it cancels, for the first time, a sanction of Model 720, as disproportionate<\/b>.<\/span><\/p>\n

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 <\/span>proportionality between the seriousness of the act committed and the balance of the current accounts not declared<\/b> by the taxpayer.<\/span><\/p>\n

This ruling <\/span>opens the door to all those penalised taxpayers <\/b>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.<\/span><\/p>\n

 <\/p>\n

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