Hiring workers in Spain

Tax authorities modify the model 720

We would like to inform you that in a recent Judgment of January 27th, the Court of Justice of the European Union has overturned the controversial model 720 of the Tax Agency, which obliges individuals to declare assets and rights located abroad, on the grounds that it was contrary to EU Law for imposing an excessive burden on the citizen.

The ruling has forced the Ministry of Finance to carry out a series of modifications to the model, taking advantage of the processing of the Bill amending Law 27/2014 on Corporate Income Tax, and the revised text of the Law on Non-Resident Income Tax.  The aim is for these amendments to come into force before March 31, when the deadline for filing the tax return for the 2021 tax year ends.

The main changes are as follows:

Paragraph 6 of Article 121 of Law 27/2014, on Corporate Income Tax, is deleted, eliminating the lack of statute of limitations for the non-filing of Model 720 by legal entities.

The penalty regime of Law 7/2012 (First and Second Additional Provisions) is deleted.

The First Additional Provision of the Penalty Regime in cases of unjustified capital gains and presumption of obtaining income could involve proportional fines of 150 percent of the amount of the base amount of the penalty for tax offenses considered as very serious.

The second additional provision of the Sanctioning Regime of Imputation of unjustified capital gains and presumed income, which implied that the assets and rights not accounted for or declared would be understood to have been acquired with charge to undeclared income that was imputed to the oldest tax period among the non-prescribed ones susceptible to regularization.

The eighteenth additional provision of the General Tax Law is rewritten, eliminating the specific penalty regime for non-compliance with the obligation to report assets and rights located abroad.

Article 39 of the LIRPF is rewritten, eliminating paragraph 2 and eliminating the lack of statute of limitations due to the non-filing of Form 720 by an individual.

We remain at your disposal for any clarification you may require.