European-CommissionOne of Europe's foremost lawyers has asserted that the European Union will open infringement proceedings against Spain following the introduction of the controversial asset declaration procedure.

Alejandro del Campo from Majorca-based DMS Consulting told Costa Blanca News the EU will start the process after receiving numerous complaints, although he added that it is likely to take 'a couple of months' before the final decision is made over the Model 720 in Brussels.

The furore is over measures introduced to combat tax evasion in Spain. Residents of Spain (those who spend more than 183 days per year in the country) have been required since 2012 to declare any assets of over €50,000 held offshore in property, shares and investments, savings and deposits.

This has caused a huge amount of hassle and stress among residents, particularly among foreign residents, some of whom have chosen to return to their countries of origin. In some cases, residents have had to pay heavy fines. Potential fines for not declaring any assets included a €10,000 minimum fine, 150% of the tax owed, 4% interest and also the repayment of any tax that had not been paid.

Alejandro del Campo has been leading the complaints and is delighted that the 720 Model has been labelled as "illegal" by the European Commission in Brussels, because it "infringes Community rights", and the fines applied for failing to comply have been seen as "disproportionate" when compared to similar sanctions in other cases. He has been well supported by others who have denounced Model 720, including the Spanish Association of Tax Advisors (AEDAF).

With this in mind, the EU now intends to open a judicial case against Spain, which is obviously of concern to Spain's tax office because the declaration of assets abroad plays an important role in their battle against fraud.

However, up until now the 720 Model has been successful for the Spanish taxman. Since its introduction over 108,615 million euros of undeclared tax has been uncovered by the Spanish tax office investigators and of course the fines meted out have also helped to generate a large amount of extra revenue.

A total of 7,013 cases have been opened against those who breached the conditions laid down by the Spanish tax office since April 2013. Even people who omitted certain information on the forms were fined €5,000 for each piece of missing information or for inaccurate data –with a minimum fine of €10,000.

Brussels intend to explore two main aspects of the Spanish law: the severity of the fines and the fact that the assets in question would not be subject to any statute of limitations, meaning that the tax office would have an unlimited time period in which to investigate the case. Brussels clearly sees that the disciplinary system can be considered "disproportionate".

Other questionable features of the assets abroad declaration law include the right to circulate freely (people and money); data protection; the fact that the law is only written in Spanish, despite the fact that many foreigners are affected; the time period; and that the 720 Model can only be filled out online.

The Commission is also concerned that the longer period of limitation as regulated in Spain is incompatible with Community law – where the Administration already has evidence of the existence of assets abroad through other sources of information, especially when it comes to property and rights located in other States EU or European Economic Area (EEA) with which there is information sharing.

You can read more about the 720 Model and your current legal requirements to submit any overseas assets that you own in our previous article

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