Spain : reducing penalties in tax returns for foreign assets

Espagne : Suppression de certaines sanctions pénuciaires
Espagne : Suppression de certaines sanctions pénuciaires

The European Union Court abolishes some of the penalties in Spanish tax returns for foreign assets



For the past ten years, Spanish tax residents have been obliged to declare any overseas assets held outside of Spain before the Spanish Tax Authority. This is done by filing the annual “720” tax form.


This obligation had a special penalties regime that was extremely harsh for tax residents, as it even included a non-prescription rule: in the event of non-compliance with this obligation, the infringement could never become time-barred.


This regime was referred to higher courts by several tax firms and finally, in January 2022, the European Court of Justice ruled that it was contrary to European Union law. Thus, all such penalties are to be considered as never having existed.


This means that taxpayers who have not fulfilled their obligations in Spain now have an option to declare their assets without incurring severe penalties, and those who have already paid penalties can now file a claim against the Spanish administration to recover the amounts paid.


The Spanish government is currently expected to issue a new act modifying the penalties regime related to this annual declaration, but for now we do not have any further information about its content.


We can at least surmise that the new regime will not be as hard as the previous one, which is good news for every resident in Spain who also holds assets outside the Spanish territory.



(Author: Lexunion España, Barcelona, on March 9, 2022)

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