The Sentence of the European Court of Justice will opens the door to recover some of the taxes and fines paid by individuals with regard to the 720 Tax Form
The Court of Justice of the European Union (CJE) states that the form 720, is contrary to the free movement of capital based on the fact that the obligation to submit that Form and the penalties for failure to comply with or for partial or late compliance with that obligation establish a difference in treatment between Spanish residents according to the location of their assets.
Elimination of the following aspects related to the failure to comply with or the partial or late compliance with the obligation to provide information concerning assets and rights located abroad would not
- Taxation related to “unjustified capital gains’ with no possibility, in practice, of benefiting from limitation
- Proportional fine of 150%
- Flat-rate fines
And what are the consequences for the individuals, what actions could they pursue?
There are different solutions depending on the each situation
- Started procedures before the tax administration or the Spanish courts of justice.
Obviously, both the Spanish Tax Administration and the Courts will resolve taking into account the wording of the recent Sentence of the European Court, that means that the individuals will recover the money paid (tax and fines). - Individuals who paid the penalties and did not claim them or did they claim but obtained a negative answer.
It would be necessary to study each case in order to see the feasibility to start a claim in order to obtain an indemnity derived from the liability against the State. - Finally, with regard to those who filed the Personal Income Tax by including in it an unjustified capital gain related to the value of the assets/rights abroad for the late submission of the form 720.
They would be able to claim the recovery of the taxes, fines and late interests already paid, provided that there has not elapsed 4 years since the submission of the said Personal Income Tax
