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Posted by Rayan Treehugger on July 17, 2013
Spain is denounced by Spanish lawyers over 720 Model
  • The restriction of free movement of people and capital has been denounced
  • Only 5% of foreign residents have presented the 720 Model
  • The aim is to remove the 720 Model completely, or at least make it fairer

A law firm from Mallorca has reported Spain to the European Commission for the introduction of the 720 Model, which requires the obligation to declare assets abroad valued over 50,000 euro. It claims that this legislation, introduced at the beginning of the year, restricts the free movement of assets and people. This is not the first complaint that Brussels has received over this matter.

Breach of EU law

The Mallorquín lawyers state that the Model 720 and all that it involves is contrary to Common EU law and that it violates two specific articles contained within the EU Treaty: that of free movement of people as well as the free movement of capital.

The two laws that have been denounced by the lawyers are:

  • Law 7/2012 Combat against Fraud, which introduced the new requirement to declare assets abroad valued over 50,000 euro
  • Order HAP/72/201, which approved the Model 720 and which established that the declaration must be presented telematically.

Foreigners in the line of fire

Due to the numerous complaints received by the Mallorcan company, it decided to act on behalf of its clients and present the complaint to Brussels. The majority of the firm’s clients are foreign residents – British, Germans, Swedish – who have seen themselves caught in the middle of this campaign to halt tax fraud and evasion.

Many foreigners have even decided to abandon Spain as their fiscal home and either move back to their country of origin or elsewhere.

Harsh obligations

Included in the complaint was the fact that the new legislation asks for detailed and specific information on the various assets that must be declared – bank accounts, shares and property – which was not always easy to obtain, and made even harder by the short time frame given to present this information.

In addition, the extortionate penalties that the Government has threatened to apply for missing or incorrect information conveyed on the 720 Model means that the hiring of a professional tax advisor is essential. This in itself could turn out to be a costly service that most people will have to resort to, being unable or too frightened by the sanctions to present the form themselves.

Free movement of people

Spain has been denounced for restricting the free movement of people for the pure fact that this new asset declaration law will dissuade those who want to come and live in Spain from doing so. The fact that so many foreigners have left already is proof to that. Not to mention that the 720 Model is off-putting due to the cost, inconvenience and fines amongst other reasons.

Free movement of capital

This legislation could also dissuade foreign residents from moving their assets or capital or from keeping them outside of Spain. This is because on doing so, not only would they have to pay personal income and wealth tax, but they would also have to present the 720 Model, which would entail added cost, time, complexity and hassle.

Disproportionate and unfair

The company also claim that the Combat against (tax) Fraud Law is not really achieving its objective and is totally disproportionate and unjust.

The fact that the law is so general and vague is one of the problems and the main factor why so many law-abiding foreigners have been caught up in this.

Additionally, the excessive fines imposed for late presentation of the declaration or missing information is unjust. If unable to pay, foreigners could end up losing these assets or having them confiscated.


With this denuncia, the Spanish law firm hopes that Brussels will rule in favour, seeing this obligation to declare assets abroad as an EU law infringement. The main objective is the removal of this obligation, or at least its modification so that it is in line with EU legislation.

Source: www.expansion.com


  • Spain
  • EU law
  • Brussels
  • European Commission
  • 720 model
  • declaration of assets abroad


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