B Law & Tax
19 July 2023

Tax advisor: Treasury will have to reimburse large amounts to reverse the penalties of model 720

Treasury will face numerous millionaire refunds after having incorrectly applied the penalties for the declaration of assets abroad. This is due to an unfavorable ruling by the Tax Agency (AEAT), backed by both the Spanish judiciary and the European Court, which considered the fines imposed on taxpayers for hiding assets abroad to be excessive. As a result, the Ministry has recognized the total invalidity of the penalties and is opening the way for generalized refunds.

This recognition acquires significant importance, since taxpayers who paid the tax with penalties or surcharges, even up to 150% of the total amount, will now be able to request their refund, even if they did not file an appeal at the time. In addition, there is no specific deadline to challenge the 720 model.

The report of the AEAT Legal Service recognizes the criterion established by the European Justice, which goes against Article 25 of the Constitution. This report also supports the enforcement agreement issued by a judgment of the High Court of Justice (TSJ) of Catalonia, which orders the automatic refund of formal penalties imposed on taxpayers for considering them contrary to the law.

The Legal Service proposed, under the opinion of the Council of State, the declaration of “full nullity of the act” due to the impossibility of maintaining such penalties. Last April, the Council of State reached the same conclusion as the Legal Service of the Treasury in its opinion. They argued that the sanction imposed in the case under analysis should be declared null and void, since it violates the Constitution and has been declared contrary to European Union law by the Court of Justice of the European Union (CJEU). After three months, final approval has been given to the refunds, a year and a half after the judgment of the European High Court.

B Law & Tax International Tax & Legal Advisors.

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