DECLARATION OF OVERSEAS ASSETS HELD ABROAD: THE EUROPEAN COMMISSION vs. SPAIN

DECLARATION OF OVERSEAS ASSETS HELD ABROAD

THE EUROPEAN COMMISSION vs. SPAIN

The legal battle by the European Commission against Spain is coming to an end.  The latest saga in this on-going procedure (which started in 2015) is that the European Commission (“EC”) has decided to refer Spain to the Court of Justice of the European Union (“CJEU”) for imposing disproportionate penalties on Spanish taxpayers for failing to report assets held abroad.  This was confirmed in an EC press release published on 6 June 2019.

For those interested in the history of this battle, the EC started a infringement procedure against Spain in 2015.  Due to an unconvincing series of arguments given by Spain concerning Form 720, in February 2017 the EC sent a reasoned opinion to Spain requesting that it modify its legislation within two months.   Spain chose to ignore this request.  The outcome of this is that the EC has made the decision to refer Spain to the CJEU.  The CJEU will therefore decide whether or not the legislation regarding Form 720 has breached EU law.

It seems clear that the EC considers that the sanctions imposed by Spain for incorrect or late compliance are disproportionate and discriminatory.  The sanctions could deter businesses and private individuals from investing or moving across borders in the single market, which is in conflict with the fundamental freedoms of the EU.

A possible outcome of this could be that the CJEU will rule against Spain, on the basis that the sanctions and consequences provided for in the current legislation regarding Form 720 is in breach of EU legislation.