The Court of Justice of the European Union has declared the unlawfulness of certain precepts relating to the Declaration of Assets and Rights Located Abroad, which will allow appeals to be lodged against proceedings opened on the basis of the contested legislation.
The Court of Justice of the European Union, in judgment C-788/19, declared that both the penalty procedure and the effects of a possible formal breach or late submission of the obligations established by the Spanish legislation are contrary to the European legal order. The main arguments for the infringement of the principle of free movement of capital in the judgment are as follows:
- The Spanish regulations violate the principle of the free movement of capital by establishing that in cases of non-compliance due to failure to file or non-compliance due to errors in filling out the declaration or because it is not considered an incomplete or inaccurate declaration, the assets will be considered as “unjustified capital gains”, without the possibility of invoking the statute of limitations.
- Similarly, the ruling considers that the rule contravenes the principle of free movement of capital by penalising non-compliance or imperfect or late compliance with the reporting obligation with a proportional fine of 150% of the tax calculated on the amounts corresponding to the value of the assets or rights held abroad. The main argument put forward is that the penalties derived from non-compliance or imperfect or extemporaneous compliance with this obligation have no equivalent with regard to assets or rights located in Spain. Hence, a difference in treatment is established between residents in Spain depending on the place where their assets are located.
- In addition, the principle of free movement of capital is also infringed by penalising non-compliance or imperfect or untimely compliance with fixed fines, the amount of which is disproportionate to the penalties provided for similar infringements in a purely domestic context and the total amount of which is not limited.
In view of the above, and given that the publication of the ruling is very recent, it is necessary to await the position of the Tax Administration and the terms on which the new regulation of the obligation to declare assets and rights abroad will be based.
As of the date of this communication, we would like to inform you that on 16 February the Senate approved the amendments relating to the reference model, which focused on eliminating the non-applicability of statutes of limitation, the imputation of unjustified capital gains and presumed income and the penalty regime, and introducing the obligation to report virtual currencies, so that the bill has been sent to Congress for its final approval.
Based on the above, we remain at your disposal to comment on any doubts that may arise regarding the new regulations and the possible consequences of procedures or situations prior to the publication of the ruling that may be subject to challenge.