On February 15, 2017 the European Commission ("EC") sent a reasoned opinion to Spain requesting a modification to its legislation regarding assets held in the European Union ("EU") or European Economic Area (EEA) Member States other than Spain ("Modelo 720"). While the EC considers that Spain is entitled to require its taxpayers to provide it with information on certain assets held abroad, the penalties imposed when failing to comply are disproportionate. Since the penalties applied are much higher than the penalties envisaged when dealing with purely domestic situations, the current legislation may deter businesses and individuals from investing in, or moving across borders throughout, the single market. Such rules are therefore discriminatory and contrary to the fundamental freedoms in the EU. If Spain does not provide a satisfactory response within two months, the EC may take the case to the Court of Justice of the EU.
The EC's reasoned opinion derives from a claim filed on June 3, 2013 by ANAFORD AG, as a member of the Spanish Association of Tax Advisers ("AEDAF"), against the Modelo 720. The latest events suggest that Spain will presumably have to change its legislation regarding the Modelo 720.
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