Disputed Chamber of the Supreme Court. A doctrine emerged about tax sanctions imposed by the Treasury for failing to formalize the informational declaration of property and rights abroad, known as the 720 form. Guided by the principles established by the Court of Justice of the European Union and the criteria that the Tax Office has followed so far, a concise ruling suggested that major offenders could see the sanctions canceled they faced.
In two decisions, issued in quick succession by the Extremadura High Court, and with a similar stance in the days that followed, the Supreme Court outlined the criteria it will apply to the several appeals still pending. Spaniards have noted that the court has canceled the fines imposed on two individuals sanctioned by the tax office for not notifying the 720 form within the required deadline. These cases involved assets, securities, and rights held, managed, or derived from abroad.
Thus far, the high court has dealt with cases centered on assets and rights in Switzerland. It cancels fines imposed by the Treasury as part of implementing the European Court of Justice decision dated 27 January 2022, which held that the Spanish General Tax Code violates obligations under European Union law and interferes with the free movement of capital. The sanctions in question appear disproportionate when compared to penalties available in a purely national context.
binding character
Two sentences illuminate this: the binding nature of European Union Law obliges Spanish judges and courts not to apply national sanctions regulations that conflict with EU law. The right to refrain from applying the sanction rule of Spanish law, when it contradicts European Union Law and to cancel sanctions set by that legislation, arises not from a direct CJEU ruling but from the broader framework of Community law. The revocation of sanctions can have retroactive effects.
This means that sanctions imposed before the European justice declaration are also canceled. The doctrine from the Supreme Court affects taxpayers. A recent example involved the former minister of finance guiding a correction to include the value of assets held abroad as capital gains in the last fiscal year, a move not typically anticipated within personal income tax.
Following Europe’s ruling in January, the economy minister signaled that the 720 model would be revised. The final amount under scrutiny reached up to 230 million euros, and, as explained, this sum will be returned to taxpayers who complete this form each year.