Spanish Supreme Court declares all ‘Modelo 720’ fines dished out for not declaring overseas assets null and void

Good news for expats in Spain with assets abroad, especially those who have fallen foul of Spain’s egregious obligation to declare all worldwide assets of 50,000€ or more. In the light of a European Court of Justice (ECJ) ruling that aspects of Spain’s 720 tax model declaration was illegal, the Spanish Supreme Court has declared all related fines past and present handed out as null and void.

In a ruling this July involving a Spanish resident with assets in Switzerland that were not declared in accordance with the Modelo 720, the Supreme Court found that the fines the Spanish tax authorities imposed were ‘disproportionate’ and violated EU law, in particular with regard to the free movement of capital. 

The sentence explained that EU law obliges Spanish judges and courts to overrule the Spanish legislation upon which the fines are based, and clarifies that this applies to the Modelo 720 before it was torn apart by the ECJ.

“Therefore, the punitive measures are recognised as null and void, including those before the sentence of the ECJ on the 27th of January 2022,” explains the ruling. 

The Modelo 720 was introduced in back in 2012 on the face of it to combat tax evasion, money laundering, and the financing of terrorism, but as I explained in my 2013 article ‘Expats are the real target of a new law on worldwide asset declaration’ it looked more like a shameless attempt to shakedown expats. It was a total failure measured against its stated objectives, and did nothing but scare away potential investors in Spain, leaving the country poorer for it. Since its introduction it has been a good reason not to move to Spain if you had assets of 50,000€ or more back home, so the fact that the Modelo 720 has now been defanged is good news for expats and Spain.

The Modelo 720 has not completely disappeared, and you may still have to declare it, but the risk of massive, disproportionate fines is no longer there.

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