More than 27 years of experience
28 January 2022

On 27 January 2022, the Court of Justice of the European Union (hereinafter CJEU) issues a judgment in the proceeding that the European Commission initiated against Spain in relation to tax form 72 – Declaration of assets abroad -, considering its penalty system to be disproportionate.

The judgment completely annuls the penalty system on the grounds of three aspects:

• The CJEU abolishes the minor penalties associated with failure to file Form 720 on time, which were 100 euros per item of information (with a minimum of 1,500 euros), and 5,000 euros per item of information (with a minimum of 10,000 euros), associated with failure to file.

• The CJEU has taken a position against the imputation of an unjustified increase in assets to the earliest of the non-prescribed tax years, in the case of failure to declare the asset.

• The CJEU considers that the penalty of 150% of the tax liability for this unjustified increase in assets is disproportionate and would be contrary to the free movement of capital.

The consequences of the ruling for the taxpayer are manifold, as the CJEU rulings have “ex tunc” effects, i.e. from the entry into force of the regulation, in this case October 2012.

Therefore, all pending sanctioning proceedings would be annulled, it would force a refund of what has been paid in the years for which the statute of limitations has not expired, and for those for which the statute of limitations has expired, the way would be open for a procedure for annulment or even for the State’s financial liability. This opens the door to millionaire refunds by the Tax Office.

With regard to form 720 for the 2021 tax year, we will have to wait for the Tax Agency’s decision, given that although the current form is in force, it has been emptied of its content by stripping it of its sanctioning regime.

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