This GMS Flash Alert reports on why the European Commission has begun infringement proceedings against Spain concerning Form 720, the form that tax resident individuals in Spain are required to declare assets and rights located abroad.
On 24 November 2015, the European Commission announced the commencement of infringement proceedings against Spain, concerning Form 720, the form that tax resident individuals in Spain are required to declare assets and rights located abroad.1 The Commission declared that the Form may be contrary to European Union (EU) law due to the fact that it “infringes Community rights,” the unwarranted statute of limitation period, and the sanctions applied for failing to comply are regarded as “disproportionate.”
There may be opportunities for relief for individuals who have received sanctions if it is ultimately determined that Spain has acted contrary to EU law. At this point, however, it is too soon to know.
Spain implemented new reporting obligations in connection with assets and rights located outside of Spain under Law 7/2012 of 29 October 2012 and subsequent regulations under Royal Decree 1558/2012 of 15 November 2012. (For prior coverage, see Flash International Executive Alert 2012-219, 5 December 2012.)
The information return must be filed, among others, by individuals who are tax resident in Spain (including employees coming to work in Spain) who hold investments (immovable property, shares, savings deposits, etc.) overseas with a value of EUR 50,000 or more.
The Commission´s decision to commence these proceedings is based on:
The Commission has given Spain two months to respond.
Although it is too soon to predict how the proceedings will develop, they may ultimately conclude with the European Court of Justice declaring the reporting obligation contrary to EU law. This will be of particular interest to taxpayers who have incurred penalties as a result of infringement of this obligation (the legality of which now is questioned) as there may be refund opportunities if it is ultimately determined the measures are contrary to EU law.
1 The infringement proceeding is numbered 2014/4330 by the European Commission.
The Commission issued a letter (PDF 835 KB) dated 23 November 2015 announcing the proceeding (in Spanish).
See the news report (in Spanish) “Bruselas expedienta a España por la declaración de bienes en el extranjero.”
This article is excerpted, with permission, from “European Commission Commences Infringement Proceedings Against Spain in Respect of the Information Return on Assets and Rights Located Abroad (Form 720),”(PDF 71 KB) (26 November 2015) a publication of the KPMG International member firm in Spain.
For additional information or assistance, please contact your usual KPMG GMS or People Services professional or the following professional with the KPMG International member firm in Spain:
María Antonia del Río Novo
tel. +34 91 456 34 00
The information contained in this newsletter was submitted by the KPMG International member firm in Spain.
© 2019 KPMG Abogados S.L., a limited liability Spanish company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.